Live from Cleveland, Ohio, it's C-level game plans with host Norman Hood. Hey, good morning, Sarah. Welcome to the show. Uh, we're gonna jump in here and talk about facilitating a business exit experience. Where do most of the people you work with, where do they struggle when it comes to exit planning? Hi, Norman, how are you? Thanks for having me. Most business owners, they usually struggle by assessing the true value of their business. They usually ask around what is a multiple that they might get on their trusted EBITA. They might ask some friends that are in the same industry what kind of valuations they've got, but a true valuation is A good assessment of your business, understanding your business model. I'll give you an example. Let's say an H5 company that does a lot of project-based work is going to be valued at a much lower multiple than an H5 company that does a lot of services work. So recurring revenue that can have a huge impact, whether you are everything for the business, or whether you have a very good corporate structure where you can delegate. That can have a huge impact on your evaluation. How sellable the business is today can have a big impact on the evaluation of the business. So there are a lot of moving parts, and getting a business inside report is getting into the nitty gritty details and showing the business owner what is the time span that they have to get to their true value. They might be able to sell it within the next 12 to 18 months, or they might need to work on it for a good 3 to 5 years. And then be in the perfect situation to exit. OK, that makes sense. So can you give me an example of somebody you've worked with recently in that area and, and kind of went through this and helped them? Yeah, I've worked with numerous business owners. One of them, she had a business that was in the asbestos cleaning business and she had a very solid business, but she was catering to too wide of a client range. She wanted to bring in as much business as possible and in the span of two years, we tried to remove the clients that were. Bringing in small business to her, but the margins were quite small. So little by little, trying to push back on these clients or raising the prices where the margins where they needed to be and then moving into more into HVAC cleaning services where you're doing the cleaning. These are much more high value, recurring revenue, commercial industry businesses, and this is something that helped to grow her business and increase her evaluation. OK, so I know from talking to you in the past, you've been involved in family bus family businesses. You've had quite a bit of experience in, in this area. What does someone like you experience as a background? What do you see in an exit that maybe someone with less experience might not see? The biggest difference is knowing what it feels like to run a business, understanding the day to day activities of the business, understanding how many hats a business owner. As to where and having all of these experiences is gaining the trust of your client. At the end of the day, if your client doesn't trust you, then they're not going to take your advice seriously. And in the long run, there are so many ups and downs that you go through throughout the process of exiting a business that you need to build that really good trust and going back and Realizing that a lot of the experiences that business corners through are somewhat similar, different industries, different time frames, different situations, but the core of it is the same, and speaking the same language with them makes the biggest difference. OK, so I'm gonna borrow an old phrase, but it's been around a while, but it's still true. There's lots of ways to skin a cat. And I know from talking to you in the past that uh even though there's lots of ways of doing it, you're doing it your way because you think that's best for your customer. Uh, so how'd you come up with how you approach exit planning? Uh, how's it maybe different than some others? Everybody's experience is different. I come from a music background, so I haven't been a Russian violinist for a very long time. It gives me perspective on how to communicate with people. Having owned the business for over a decade, gives me a different perspective on how to communicate with business owners and. At the end of the day, every person has a unique way of sharing information and receiving that information. And it's not a cookie cutter approach that I have in my mind. It's through long conversations that you have with the business owners. It's by going through a business inside report where you ask them sometimes over 150 questions, understanding the inner details of how they think, how their business functions. How they communicate with their staff, how they communicate with their clients. So it's really building that rapport with your client that is a difference maker. There isn't one specific approach I have in mind. It's trying to understand as best as I can how I can help somebody, and with time that relationship grows. It's definitely not the same when you first have the conversation, and I've been working with clients, sometimes with over 2 years, it becomes a completely different relationship after that much time passes by. OK. Out the crystal ball. Things are going a certain way right now, but sometimes things change. What do you seek maybe coming down the road, a trend that might cause a shift in the way exit planning's done, and if that does happen, what, how would you do, do to adjust to it? The way exit planning is done, I don't think it's going to make a huge shift. AI can play a big role in terms of how you process information and how you analyze information. I think the biggest adjustments is the unexpected. So the tariff made a huge impact on a lot of businesses, for some good, but for most, not that good. And having a business that is robust enough to be able to maneuver these uncertainties is the most important thing. And as you're building a business that is as attractive to as many buyers as possible, you're building for these unexpected events. So you're basically lowering the risk threshold of your business. I think that is the biggest thing that a business owner can work on if they have the time. But if they cannot, you try your best to gain as many small wins as you can in a short period of time that you can work on it and hope that things don't go wrong because a lot of things go wrong. OK, so that is incredibly present. So, uh, looking at your system, do you think it's fair to say that it's maybe more value focused and deal focused and uh like some of the others? It is more value focused because it is a process that will require more time than just somebody coming in and telling me, Can I sell my business tomorrow? Now some businesses are so attractive, yes, they are ready to sell tomorrow and it's very easy to find a big pool of buyers to prop up the price, but more often than not, especially in the lower markets, in the mid markets, maybe that's, but in the lower markets. The businesses are run by one person. Everything goes through that one person. And you need time. You need time to understand what are the levers you want to use depending on the time span that they have and the bandwidth that they have to work on that business, and this is where you start making your decisions. You cannot work on everything in one go, so depending on how much time you have, time in terms of per day, how much you can allocate, and how much time in terms of a timeline in the future. So taking those two things into consideration, you start prioritizing what are the things that will move the needle the most. And this is how you start building value and fortifying the valuation of your business. OK, so if you could could only focus on one metric to measure how well your clients are going through the process, what do you think that would be? The one metric that I would really focus on is how willing are you to put in the work to move the levers that are needed to make your business more valuable. It always starts by self-assessment. No M&A advisor can do magic tricks for a business owner. They need to decide what is the thing that needs to work on the most, and they need to roll up their sleeves and need to work it. We can create the plan. We can create the support. We can do everything in our hands to help them through that process, but they need to be willing to do the work. And if you're not willing to do the work, it's not going to happen on its own. You might get lucky. Maybe the economy might pick up and your evaluation will go up because your business picked up, your margins got a little bit better. You've got a pool of buyers that suddenly are interested in your business, but these things rarely happen and you definitely don't want to rely on that. OK, so there's lots of things to work on. You mentioned you, you have to pick what's most important and work on that. Uh, what do you think right now, if you had to choose one thing, if someone were to start tomorrow working on their business, what do you think the first thing would be they should look at? The biggest impact on your evaluation is risk, so you want to start with that, and risk can come in many factors. It can come in how is your business model. So going back to the first example that I gave you, if it's an HVAC company that relies on project-based, OK, maybe you have many projects that are spread out through dozens of contractors. That could be less risky than you having 3 clients that are giving you over 90% of your revenue. That is a very risky business because if one of them forget whether they're not going to give you projects, they start delaying on payments, you already have a huge cash flow problem. So it could be a business model function. Or it could be you are the person that is the driving force of that business, whether it is you bringing in all the business, whether you being the person that is pricing, whether you being the person that is running the business. So you need to find the component that makes your business the most fragile, and you need to start working on that one. And sometimes it could be pricing. Maybe you pricing in a way that is not as efficient as it was in the past. So this is why when you go through a business insight report, you go through all of these levers in detail and you show the business owner, OK, these are the things that you're really good at, these are the things that you need to work on. These are the things that we suggest you start working on from day one, and these are the things that if you have the timeline for. To wait and to work on things for 3 to 5 years then You can turn into a small business into a mini corporation. So it's really about how much work you're willing to put and how much time you have to put in the work. All right, great interview. Appreciate your insights. Uh, let me come back anytime, but we'll talk to you soon. Thanks for your time, Norman. Looking forward to our next call.