Episode 54: How to Double the Amount of Money You Put In Your Pocket When You Sell Your Business with Marvin Storm

Episode #54

Mike O'Neill: Welcome back to The Get Unstuck & On Target Podcast. I'm Mike O'Neill with Bench Builders and we specialize in helping growth focused entrepreneurs, build the teams and the processes that they need to scale their business. Joining me today is Marvin Storm. Marvin is the host of the Business Exit Story Podcast. Marvins going to be sharing why the most successful business exits are well-planned. He's also going to share tips on how to double the amount of money that you put in your pocket when you sell your business. Welcome, Marvin. 

Marvin Storm: Yeah, it was great to be here. I'm looking forward to our chat today. 

Mike O'Neill: Well, I'm looking forward to it for a number of reasons as well. First of all, as you know, folks who listen to this podcast oftentimes are business leaders. Many of them are business owners. And, I have been told that when you start a business, while you're starting the business, you need to be thinking, soon about how might you exit that business? And I know that's something that you've developed some expertise. My understanding Marvin is you have founded, you've acquired and you've scaled multiple businesses over the last four decades. You know what you're talking about when it, when it comes to exiting, but you learn some lessons along the way that kind of help fuel what you're doing nowadays. Can you share a little about that story?

Marvin Storm: Well, I, you know, kind of embarrassing to say that I've had four decades of experience and, in one aspect, but, those, decades of experience have taught me a lot. I think I've learned more from my mistakes and I think that's kind of a mantra for most entrepreneurs. They learn more from their mistakes and kind of the hallmark of entrepreneurship I think, is being able to learn and not look back and to move on. And I've certainly done. And, you had mentioned there that, you know, some philosophy out there, how you should think about exit is that you start very early, as you scale and grow a business and start thinking about an exit. Unfortunately, what I've found is that that doesn't happen all that often, most entrepreneurs, you know, spend most of their time. You know, in the trenches scaling, building, putting out fires as they grow their business and they do have, you know, sick their head up to kind of look down the road. And what is around the corner? As far as starting to think about how they're going to get out of the business, I've often amazed me, how often I see entrepreneurs and, you know, people thinking about getting into business, they'll spend months, if not a year or two, thinking about what business are going to get in and writing business plans and, you know, developing strategies to grow and scale their business. And you know, relatively a few weeks or a few months when it comes time to exit a business, they, they don't have a well-thought-out strategy plan or an idea of how they're going to get out of a business. And I've always been somewhat amazed at that. A number of years ago, I was in a kind of a round table discussion with the group of business owners and entrepreneurs. And we were discussing, scaling a business and growing a business and all the, it was kind of, kind of like a master class type of a round table that I was involved in. And the topic of business exits came up. And one of the more senior members of that group and a very successful business guy. I said that you shouldn't worry about, you know, how you're going to get out of the business, sell the business. He says, if you build a good business, the exit will take care of itself. And there was a lively discussion around that topic. And I've often thought back to that. And what I've concluded, at least in my experience is that that does work out sometimes. That if you build a great business, the exit will take care of itself, but that isn't the norm that isn't predominantly what happens. You can get lucky, you can have the stars line up and have a successful exit by just being at the right place at the right time and have done enough of the right things that your exit is spectacular. But data and statistics will. Show that that's not traditionally or what happens most of the time. Most of the time exits are subpart, because they aren't planned. They happen because they are event driven many times. And by that, I mean, an illness, a death, problems with a partner, competitive, burnout situation. You'd just get kind of worn out and or your sales take a dip and you think of, well, now's the time to exit. And all of those are really the wrong reasons, to have those type of events drive the decision to exit. Because generally you're unprepared. And you don't have the ability to optimize or maximize the valuation of your business, because it's, timing is not right. You haven't done the right things to be in a position to have multiple buyers at the table and a well-thought out exit plan. That's what I found. Anyway. 

Mike O'Neill: I know that you're speaking from firsthand experience because you've exited a number of businesses. And I'd like to talk a little about your podcast here in a few minutes. But as we're thinking about people who start business, this term entrepreneur, it's batted around. very often, we are recording this podcast in early September. The experts have said that there's going to be a huge influx of people leaving the workforce in the traditionals since, and going into business for themselves. A lot of wannabe entrepreneurs. What makes a entrepreneur successful? And I guess the question I'm asking you. What is it about an entrepreneur that makes thinking about exiting hard?

Marvin Storm: Well, that's a mouthful of a couple of questions in there. What makes an entrepreneur? I grew up in an entrepreneur family. My father, you know, had his own business. I watched the ups and downs of business ownership. My dad really didn't want me to follow his path because it was hard. He was a mechanic. He had his own shop. He had several, you know, related businesses, a towing service. They had a parts store. And, you know, he had the traditional small towns, small business ups and downs, very much driven by the economy and how well his businesses did. And, he didn't want me to follow that path. Actually. He wanted me to get an education. He himself never graduated from high school. And so he wanted me to get an education. So, you know, that's kind of the path that I, you know, drifted toward and I got my degree. Got my degree in accounting and, you know, work for Deloitte and, you know, left that world decided I didn't want to be an accountant. And, you know, I eventually it kinda kind of drifted back to my roots, you know, I, playing pickup basketball one time, played every week for years and I met, my co-founder of a first company I founded. Started chatting about what we were doing and what we liked. And didn't like, and we ended up, you know, walking out a very well-paying jobs and, you know, finding a small office and starting our first business. And we had a great ride. We timed the market just, just right. And we had, we made, we did very well in that business. And what I sort of thought thought about as I entered my entrepreneurial journey. The big question, you know, are entrepreneurs born or they made, and I think that the entrepreneurial mindset, and the tolerance for risk is I think part of a person's personality, but success in entrepreneurship is really driven by the tools that you learn to use. The strategies, the tactics, the education that you get, the ability to learn and to, to kind of push forward. And so, you know what I found, and being able to scale and exit a business as a, if you have the right tools and you have the ability to work hard. I think there are very few people, you know, you talked about a large influx of entrepreneurs. I think that you will see this. I think technology is driving that, driving that trend. You can start businesses for a fraction of what you could even a few decades ago. And I think you're going to see a lot of, new business formations. The, the culture in the U S is, is driven towards entrepreneurship. I think we're an entrepreneurial nation, and I believe that as those entrepreneurs enter the workforce and leave the workforce and enter entrepreneurship, that one of the things they needed to really seriously consider is how they're going to get out. They'll spend a lot of time, like I said before, thinking about how they're going to get into a business and what business they're going to get into. And one of the things they should think about is how they're going to get out of that business. And you know, how long they're going to be in the business and start making decisions based on what the timing of that eventual exit would be. Because unfortunately I've seen people spend decades, if not a lifetime building a business only to squander the value and their legacy, by making a few bad decisions at the wrong time as they got toward the end of that, entrepreneurial journey. They just didn't make the right decisions and it was devastating for themselves and their family and a lot of people that work for them too.

Mike O'Neill: Marvin, I appreciate you sharing a little about your entrepreneur. Story and that it seems as if what it takes to be a successful entrepreneur means that if you have a successful business, it's hard to let go. It's hard to start that process. This is going to be a, maybe a tough question to answer, but let me ask it nonetheless. If people listening are business owners and they're hearing up, okay, I need to plan my exit. Is there a general rule of thumb? That you kind of have found works best if you want a well-planned exit, how far in advance time-wise do you typically recommend people give thought to this? 

Marvin Storm: Well, I think that there's never, you know, a specific time the earlier you start, the probability is the better of an exit you're going to have. Because you make decisions, strategic decisions that have a pretty big impact down the road. It may be the type of people you hire and may be the type of leases you sign, whether you lease a building or buy a building, if you're location sensitive type of situation, it may be, the, the thought process. You know, how you set up your management infrastructure? You know, there are some key components that a buyer will be looking at depending on the type of business that you have. What I've noticed over the years is that, and I've seen. In the business community, the, the professionals that help you exit a business, that means the M and A specialist. That means the transaction attorneys or wealth managers or business brokers that these people that do, facilitate and provide advice for business ownership and getting out of, of the business. They, they will tell you that, you know, there are different types. Levels of businesses and some of those advisors specialize in certain sizes of business. And those are basically three kinds of buckets shirts, kind of what is called the main street type of business that generally has a revenues up to two, maybe $3 million in revenue. And the owner in that type of businesses, crucial to the success of that business. They are the type that are there on a day-to-day basis and making things happen and tend not to surround themselves with people where they can kind of take off for a few months and not be there because the revenue isn't there to support a high caliber you know, management team that you can bring in and delegate a lot of those responsibilities to. So the entrepreneur and generally the buyer to that type of business, it's going to be someone similar. That's going to roll up their sleeves, become involved in the business. Then you have kind of the next tier, which is lower middle market type of businesses, maybe from 3 million to 10, $15 million in value. And there you do start getting into a management infrastructure where you have key general managers. You know, vice-presidents of operations and, and marketing and sales and that type. And then you sort of have, you know, the $15 million and up type of business, in what we call mid market or upper middle market type of businesses. And so in each of those, the buyers are different. The type of buyers tend to be different and they have different needs. And so as you look at your business, you really want think about, oh, who is going to be the buyer of my business and what are they going to be interested in if they're going to want to acquire my business. And when you start thinking about that early in the process, you start to make different types of decisions on what you do as, how you run your business. When you start thinking about who's eventually going to acquire my business. And I've often said to entrepreneurs, business owners, you know, would you buy your business in the shape it's in right now? And sometimes you get sheepish looks saying, well, I don't know if I would or not, you know. Because the financials aren't up to speed. You know, the, the manner, the process that they have in place, everything is up here and the entrepreneurs had, you know, they kind of control everything themselves, and that's a tough type of business to sell when the entrepreneur is the person that controls everything. It's tough to find a buyer for that type of business. So the question to you posed is when should you, it's never too early to start. And generally speaking, the earlier you start the better of an exit you're going to have, because you can make adjustments along the way. And you, you, you get into a mindset of thinking about your business and that I think is critical. 

Mike O'Neill: I do appreciate you kind of differentiating entrepreneurs and the size of the business and the complexity of the business. And perhaps that lead time that that might be required. We kind of build the topic of this episode is how to double the amount of money that you put in your pocket when you sell your business. Matter of, I think that's almost in that almost a tagline of an upcoming book of yours? 

Marvin Storm: Yeah, I, I started this podcast, you know, I had my last exit was, you know, I w I, I probably wasn't prepared, you know, and the reason I've become so passionate about this is because I've been through and made the mistakes. In some of the earlier businesses I had that I stepped away from and sold. They, they didn't involve a lot of people, you know, a few dozen employees. And, you know, millions of dollars in revenue, but not the type of my last exit. It was a company that had, you know, millions of dollars, many millions of dollars in revenue and involved private equity, involved boards of directors, bankers and attorneys, and, you know, to get the deal done. And. You know, I just wasn't as dialed in to the exit process at that level. And the amount of due diligence that it took. And although that worked out fine and as I, you know, thought that living every entrepreneur's dream, you know, kind of to kick back and, you know, take life easy, found out very quickly that, when you spent so many years with the pedal to the metal and, you know, you know, kind of in a sprint all the time, then to have not a lot to do with your days. It gets very boring very quickly. And so I got to thinking about, you know, my exit and what I did right. And what I did wrong and, and, but all the other experiences I had and, you know, it's, I'm going to do a podcast, you know, I'm sure there's a lot of other people out there that. Are going down the same road that I went, I wish I would have had a mentor or someone that I would have been able to learn from so I wouldn't have to make these looking back now, somewhat dumb bonehead mistakes that I made. And, you know, I think I'll have a podcast. So my original thought was that I'd interview entrepreneurs that had sold their business. But very quickly I figured out. Every entrepreneur that sells a business, thinks that their business exit is the business exit to end all exits, you know, and, even though they were all not all that interesting. And it's going to be tough to build an interesting podcast, kind of routine type of exits. But what I had this epiphany one day, well, why aren't I talking to the deal makers, the people that do this every day, all day long. They deal with dozens, if not a hundred transactions over their career and some into the thousands. And, have them tell their worst stories, the good, the bad, and some of the really ugly stories that they've been involved in those transactional stories that they learned from. And I'm sure they have great takeaways. And so I did, I shifted gears and I started talking to M and A specialist and transaction attorneys, CPAs. Business brokers, wealth managers, those people that do this and work with entrepreneurs every day, helping them position their business and exit the business. And they have some phenomenal stories. Some real heartbreaking stories too, that, people that have spent a lifetime building a business and then squandered it in the last lap of the race. And there's some great takeaways from that. And what I really concluded from that experience and, you know, interviewing all these people with their hundreds of stories on my podcast is that there are some key principles. In that you really can, have a sizeable increase, 50, 100, 200, 500%, increase in value, but there's some key strategies and tactics that if you just get right, you can dramatically increase the, that exit value. And what you put in your pocket when that wire transfer hits your bank. And, it's not all that difficult. If you understand the process, you understand the key components to kind of make that happen and what a buyer is going to be looking for and the type of buyer for specific types of businesses at different levels. All of these are kind of standard. And so I've, you know, based on the podcast and a lot of the feedback I've been getting from, you know, the audience that listens to the podcast is, you know, what do I do? How do I do this? And that so I am, I decided I, I, I'm putting the final touches on a book that will come out next year. It's going to be called Pack Your Parachute. Really after the, the metaphor of a pilot doesn't pack his parachute when the engines are on fire and, he's in the back of the plane packing his parachute. That's not how it works. That parachute is there. It's ready to go and if needed and when needed, he can grab it. It's already packed. And, you know, using that metaphor, you don't want to be caught with your pants down, and have to pack your parachute. when things aren't going right in your business because it never ends well. Sometimes you crash and burn, but if you have that parachute pack, you've given it thought, and you you're ready to go at any point in time. If something unexpected happens. As I mentioned earlier, you have an unforeseen illness or death or a key person leaves or something happens in your business. Your parachute is packed and you're in a much better position to step away from the business because you've thought it through. And that's what the book will be about. And, and you really can tremendously impact the valuation, the money that goes into your pocket by doing a key, a few key things, and you don't want to work your whole life for decades, and squander it at the last, you know, year or so in the business. That's, that's not a good outcome. Dreams can be wrecked lifestyles, go down the tubes, families under tremendous financial pressure because you didn't do the right things when you position, when you thought about exiting your business. That's, that's what I want to prevent. I, I become very passionate about, about this because I've just seen too many situations where, bad things happen. 

Mike O'Neill: You know, earlier Marvin, you made a comment about you failed to do your due diligence to sell your business. And I've always used the term due diligence because I would be on the acquiring side, I'm doing the due diligence to make sure I know what I'm actually, buying, at a detailed level. So I've never used, heard it's using that term. It makes perfect sense. I love the fact that you named your podcast Business Exit Stories, because what I think you're doing is you're bringing these experts in and they're sharing stories. Some good, some not good. But lessons learned. How long have you been podcasting? 

Marvin Storm: It's going under the third year now. And, you know, the, the fascinating thing about, the content that's shared on the podcast, it's all true. These are actual stories. These aren't made up these, these aren't, you know, situations that are theoretical, like you would at an MBA class or something, and you're doing a case study. You know, the, these are actual deals, you know, some, you know, because of the confidentiality, you know, the names have been changed to protect the innocent. But the, the actual details of the transaction are true to form. And the, the transactions that are shared and how they unfolded and what went right, what went wrong and that each story, that is shared transactional story that's shared, there's a key takeaway. You know, what, what can be learned from this? And that's where the real gold nuggets are. You know, I've had people comment, you know, boy, that sounded just like my company. I don't want to end up like that guy did. You know, I'm going to have to change what my, my process, my thought process, because he that's just my situation to the T and I don't want to end up like that. And so it's really been the catalyst to give people some incentive, to start thinking more seriously about their specific situation. And how, how they're going to actually be able to step away from their business and what they're, what they should be doing, before that happens. And that's really the benefit of the podcast and some of the stories that are shared.

Mike O'Neill: I'm looking forward to reading some of these stories when this book comes out next year. You have shared a little bit about your own personal entrepreneurial experience lessons learned. So in keeping with this podcast, would you mind sharing maybe an example where perhaps you got stuck and if you got stuck, what did you do to get unstuck?

Marvin Storm: That's a great question. Because every entrepreneur out there, hits a roadblock, they hit a wall. It's either and scaling their business or how they're managing. They, they, they get to a point where they just can't advance the ball down the court. And in my specific situation, it was probably, growing, you know, one of my businesses that I had, it was growing revenue beyond a certain point, you know, to, to kind of bust through that multi-million dollar, you know, level and the grow. And what I eventually concluded, after, you know, bringing in some people that took a look at my business and joining masterclasses, you know, with other entrepreneurs is that I didn't have the right team in place. But the team I had on board is only going to be able to get me so far. And we had sort of gotten that far. And so I had to stand back and evaluate, you know, and make some tough decisions when it came to personnel and, and people that have been with me for a long time and, and be able to kind of move on from that. So getting them stuck, sometimes you have to take a hard look at yourself. Sometimes the problem is you. In my, in the situation that I was, the problem was me as, because I, I had, you know, stack the bench with, you know, people that had got that were very loyal, had gotten me a long way down the road, but in order to get unstuck and move to that next level, I just had the view, my business differently and the talent that it was going to take to get there. Sometimes you're lucky that the talent you recruit are the people that can take you to multiple levels down the road. In my case, that wasn't the situation. 

Mike O'Neill: That's very insightful. I appreciate you sharing that. As you kind of reflect on the things that we've discussed thus far, what might be some closing thoughts or takeaways you want to make sure our listeners have?

Marvin Storm: You know, for those entrepreneurs out there that are in business that have been in business for awhile or those that are thinking about getting in business, maybe for the first time or again, it's never too early. I mentioned earlier in our discussion here that, there's a philosophy out there that if you build a good business, the exit will take care of it. Well, that's true in some cases, but the statistics show that amazingly 80% of the businesses that are listed for sale, and this is all businesses, big and small that are listed for sale, actually don't end up selling. And that's really a staggering statistic when you think about it, that a lot of people have put in a lot of our hours, decades and sometimes a lifetime of work and they don't exit at all. They end up winding down their business or closing it. And in some cases going bankrupt. It doesn't have to be that way. Those, you know, almost any business can be, you know, exited profitably, if the right things take place. If you think about that eventual exit of what you're going to do and put the right things in place. Almost, I would say 95% of all businesses can be successfully exited and profitably exited if the right things are taking place. And if you leave it up to chance, then you you're just rolling the dice that the right things will happen at the right time. And that doesn't happen very often. That does happen, but it doesn't happen very often. So if you want to, you know, monetize all that hard work that you've put in and those long hours and the risk that you've taken and staying up late, worrying about payroll. If you want to monetize all of that effort, you know, spend a little time thinking about and planning for the time when you're eventually going to step away and be able to substantially increase the value when that happens, 

Mike O'Neill: Marvin, you shared a staggering statistic a moment ago. And that is. It's your contention that if you plan right that 95% of the businesses out there can be successfully sold, but you find that there are 80% of all businesses that might want to sell don't because they're not prepared.

Marvin Storm: Yeah. That's, that's a statistic. Yeah. That's a valid statistic out there. It's actually more than 80% that, of course you're talking about businesses of all sizes and some are just not big enough to sell, but, I'll, I'll modify that last statement. Oh, they are big enough to sell if the right things are done, but unfortunately the right things aren't done. So they're not so saleable. And, it's just, it's just sad. It's just sad, you know, and it's heartbreaking sometimes when people have to step away and they've sort of planned on the sale of the business to fund their retirement or do the next thing and they have to walk away with little or nothing to show for it. And it can be really sad sometimes. And, its unfortunate that's why I get really wound up and passionate about this whole topic is because it just does not have to happen. It just senseless in some, in some situations, but it, it it's, people just don't give it enough thought. That's that's the bottom line entrepreneurs are, you know, sometimes shoot from the hip type of people and, they can make things happen. And, but when it comes for someone to take over the reigns of their business, they wouldn't buy the businesses in the condition that, that their businesses in. And so it's no surprise that sometimes it's difficult or impossible to sell the business. 

Mike O'Neill: Marvin, you mentioned passion. It's very clear that you have a passion for this topic. And I suspect as people have been listening, they would like to learn more from you. What is the best way for our listeners to connect with you? 

Marvin Storm: Well, probably one of the best things they can do is I've prepared this little report. You know, it's about, you know, how to double the value of your business, at the time you sell it, but put the, put the double the amount of money that you put into the pocket. Cause there's some post exit planning that keeps that money in the bank instead of somebody else's pocket. Just go to businessexitstories.com/report and download the report. And that would be the best, the best way for people to gain some insight to my thought process. And then I can keep in touch with them. And you know, when my book comes out, they'll have be an opportunity. I'm going to have kind of a pre, a pre published offer for, for the book for those that are interested. 

Mike O'Neill: Excellent. We will include that information. You just shared in the show notes, Marvin, you are a professional in every sense of the word. I'm confident that those folks who listened to the podcasts are gonna learn a lot. I've learned a lot just listening to you today. Thank you. 

Marvin Storm: Well, I've enjoyed this discussion. You asked some insightful questions and I hope that I said one or two things that may. Inspire someone out there that has a business that at least give some thought about how they're going to get out of their business. At some point in time, it may be a year or a decade later, but that time will eventually arrive for every entrepreneur. 

Mike O'Neill: I can assure you, you did just that. I just want to thank our listeners because I hope you've picked up some tips during my conversation with Marvin, that will help you Get Unstuck & On Target. Every Thursday, we upload the latest episode to all the major platforms. So if you haven't already please subscribe, but if you're an entrepreneur with big dreams, but you're tired of letting your business, keep you up all night. It's time to stop listening and take action. Head to the bench-builders.com website, and schedule a quick call and to see if our growth coaching program can help. So I'd like to thank you for joining us. Until next time. .