Episode 17 Interview With David Barnett
Hello Heartreperenuers. It’s Terry Levine and thanks for tuning in to Heartrepreneur® radio. I know many of you are very curious about selling your businesses. I’ve never been able to get a great expert to share their knowledge. That changes today. Today I have David Barnett. He has been evaluating businesses since 2008. He is a certified machinery equipment appraiser since 2009. He was the first person in his market to earn the certified business intermediary designation from the international business brokers association in 2009. He has worked with clients on transactions and that led him to the field for preparing businesses for sale and helping owners maximize value. I am excited about that. In 2014 he formalized a process to help businesses systematize their operations and formalize their organizations in bite sized steps that required minimal disruption of operation. This is getting to be really exciting. I want to tell you about his first book. It came out in 2014 and was an Amazon best seller. Today I invited him to talk about 2016, how to sell my own business. All of his books have achieved top selling spots in Amazon. I know David is busy. He does all kinds of things. Workshops, business acquisition, a YouTube channel, and a blog. David, thanks for taking time out of your day to join us here today on Heartrepreneur® radio.
David: Thanks for inviting me.
Terri: How did you and why did you resonate with the concept of selling businesses. How did that show up for you?
David: It started because I was brokering debt solutions for small business owners. People were coming to me looking for ways to get money to start or expand their business. Increasingly, they were looking for money to buy businesses. What I noticed was there was a real lack of expertise in my market to help people do this properly. I saw a lot of poorly structured deals. I saw that many had no idea of what they doing. So I jumped into that field. I was in the industry from 2008-2011. I ended up leaving that business model behind me and now today what I do is work with people around the world to help them sell their own business. Instead of being a broker.
Terri: The reason I am stoked about this is very often I talk to business owners of all kinds of businesses and they don’t have an end game. A lot of them are getting older, don’t have an end game. So let’s talk about both. What would you advise to someone who is starting out and what would you advise to someone who is getting towards the place where they should think about selling their business.
David: I tell people in my workshops and seminars, that you should have a plan for getting out of your business as well getting into it.
Terri: I am glad you said that.
David: A business is an asset. It is something that you own that is supposed to generate cash flow. When I owned my business brokerage and people were coming in to sell their business, they had one of the five top reasons to sell. Those were burnout, divorce, poor health, relocation and retirement. Four out of the five have nothing to do with how old you are. Four out of the five are not things that we plan for. I always advise people that if they are consistently considering the sale of the business and keeping their business in a saleable condition, not only will it be easier to sell when the time comes, but here is the great part, if your business is ready to sell and you have systems in place and everything is ready and you can hand over the reins to someone else, you will end up with an easier, manageable business in the present paying you more to own it today, regardless if it sells or not.
Terri: That is fantastic. That is important for people. I go with Steven Covey. We wrote a book and he said, always start with the end in mind. When someone is going into business, I ask them what the end game is. I know that there is a lot of coaches, consultants, speakers, trainers, authors, or beauty salon owners, so if they are in their business and working by themselves. They are in their 40’s and not thinking about down the road, what are some of the things they should be thinking about today.
David: I like how you bring up the individual operator. I had a meeting yesterday with someone who has a partner and the two of them together have a small business that generates the same amount of money they would earn working someplace else. One of the first things I had to get their mind around is if they are in a business and are earning the same amount of money that you would working for someone else, you don’t actually own a business, you own a job. If you own a job, whether you are going to have to sell at the end of the day. It is going to come down to the assets. I say to people, if you want to build this into something saleable down the road, we have to look at ways to scale your business and take advantage or leverage the efforts of other people. The chiropractor who moves from the solo practice to the office with several other practitioners, massage therapists, etc. all working together, he is actually able to earn money off of the efforts of other people. Now we are talking about a business. There is goodwill now that someone else may be interested in paying for in the future.
Terri: What percentage of people actually go in business and start with an end game?
David: I have no idea what the number is I just know that it is really rare. For me to run into somebody who gets into business with the end game in mind. Most people get into business simply because they are trying to replace an income from a lack of employment. What I notice though is that as you get into bigger businesses, the people involved in private equity and private investments, those people, their whole business is figuring out what someone else might want to buy. Then they go and try to assemble or build it. They shine it up and make it look good just so they can sell it. You see that more in the upper middle market space. Not so much in small business.
Terri: Makes sense. So, if someone is curious who is listening to our show and wants to know more and reach out to you, what do they do and who is the ideal person that should reach out to you?
David: Anyone who is thinking about what selling their business may entail, you should go to my website howtosellmyownbusiness.com I break down the selling process into five steps. The first step is education. There are easy links to my blog and YouTube channel. It has 80 videos on buying and selling businesses. As well as links to my book and a free copy of 12 things to do before you consider selling your business. It’s a place to learn about the transaction and what it is going to look like and how it is going to be set up. For most people, who have never bought or sold a business before, it can be very different. People can imagine it as selling a house or a car, it isn’t the same at all. It’s quite different. When you sell a business, you get into financing terms. It’s so difficult for buyers to get financing to buy business, the seller needs to look at ways of being the bank themselves to help the buyer by receiving payments over time.
Terri: I have a lot of notes. I have sold my own businesses and I am learning quite a bit here. I want to thank you. By the way, I love the name of your website. I always teach people to say exactly what it is on their website. Great example of a website that does that.
I am going to suggest that my listeners check this out because I don’t care where you are going into business, in business, in your exit plan, I have learned a lot here and I have sold businesses. David I am going to turn those people over to you. You can help them in ways that I can’t. I am glad I got to know you. Thank you for being here.
David: Again, Howtosellmyownbusiness.com.
Terri: Folks, when I tell you to get a website that says what you do, boom, awesome example. Thank you for being here. To my listeners please tune in to each and every show on Heartrpreneur radio, leave us some comments, make sure that you spread the love so that we get more great people listening and more great folks like David joining us and giving us their wisdom. Thank you.
David: Thanks Terri.