Episode Transcript
[00:00:00] Speaker A: SAM.
[00:00:30] Speaker B: Welcome to another episode of Balancing Acts, your guide to grow profit and scale. I'm your host, Linda Hamilton, a CPA certified exit planning advisor and a systemologist. I've been looking under the hoods of businesses to uncover what truly drives success for more than 30 years.
We know that the numbers matter, but the story behind your numbers matters equally as much as. So in this show, we want to dive in dial into both.
Today's topic is about exit planning, about selling a business. We've talked to an M and a expert who works with business owners valued at 5 million to, I think 100 million.
And now I'm going to talk to a business owner who built a business from scratch. Roz Alford, she built a business from scratch and she grew it to $150 million. She went through every phase of business from growth from startup to bringing in a partner, selling her business. And she's going to share her experiences with us that will help you along your journey. But what I'm going to start with is the problem that in the exit planning world, we know that more than 50% of business exits are due to a sudden unexpected event. It could be illness, it could be divorce, separation.
And Ross's business. Ross did face that in her business due to an illness just before she sold it. So, so we're going to open with talking about growing her business and bringing in a partnership. First Hi, Roz.
[00:02:05] Speaker A: Hi, Linda. How are you? First, can I just say thank you for inviting me to join you today.
[00:02:11] Speaker B: You're very welcome. It was my pleasure. And Roz, you and I are both members of the Women Presidents Organization and you've been one of our largest members. You've been on the board and we've worked on the board together. So there's a lot to share about our experiences with, with women who sell businesses. And some of the statistics are bad, but WPO members have been successful selling their businesses, as you were. I would like to talk about, I know that you brought in a partner at some point. I don't remember, was it five years, 10 years, but you brought in a partner. What led to the decision to bring in a partner in your growing business?
[00:02:53] Speaker A: Well, this was a long time ago now, but it was 1999 and the business had been in effect, I mean, we started in 89, so it was 10 years old.
And at that time, IT companies were, and staffing companies were totally different than they are today. There weren't very many. Number one, you presented people to your clients that were the very, very best in Their skill sets. There were no procurement offices per se.
It was difficult. In 1999, things changed.
Procurement played a big part in it. And now you had to kind of bid for the ability to work with a particular client. And I will tell you that most of my clients were Fortune 50s.
And so it was a whole new arena. I am more of an operations person. I'm not really a good salesperson. And the business that I had all came to me by referrals. I had started out at Kraft Foods in Chicago and had helped build an IT data processing department at that time.
And I ended up moving to Atlanta and Craft was my first client. And then they referred me to other clients.
So everything I got was by referral. And now I was going to have to go out there and try to sell as well. And so I sought after the.
[00:04:42] Speaker B: Best.
[00:04:42] Speaker A: Salesperson in the industry that was in Atlanta. And I chose my business partner based on that.
And I will say this, that our business went from 10 million to 25 million in two and a half years. And I will say that was because of my business partner.
And growth after that was very rapid because we ended up in 2016, in 2015, we were right at about 110 million with 800 employees.
[00:05:14] Speaker B: And so which is amazing growth. You know, there are very few. Only I think it's 2% of women owned businesses break seven figures and only 9% of all businesses, whether they're male owned or female owned, break seven figures and you grew to 150 million. And I'm sure the business looked very different then, But a couple things you were talking about on bringing in a partner because you were not a salesperson. So many of our listeners. Listeners are entrepreneurs and small business owners. You go into it because we have often, you know, we have a passion for something, but we often have a skill set too. Right. There's something we do that we bring to the market and create a business around.
But to grow, you can't. Oh, you can't wear every hat. Right. You can't have all skills. So when was it difficult to recognize that you needed that skill set? When the business model changed. Right. As a result of your corporate clients making you go through a procurement process.
[00:06:18] Speaker A: Yeah, I mean, it was difficult because I knew that I was good at maintaining clients.
I knew that I could handle all the functions operationally. And at 10 million, we were still small at that point in time, I'm going to say we probably only had 15 internal people.
And so I knew that I could not do it. Something was going to falter.
And I went out to seek the number one person in the industry that I could find and developed a partnership with her.
So that's how we began. And at that time, she was like 15 years younger than me, I'm going to say. And back in 1999, she was making for a company she was working and her salary was $350,000. Now that in 1999, that was a lot of money.
And so I knew, and I knew her from having worked competitively with her.
So I knew she would be good. And I made her an offer that she couldn't refuse. I gave her 50% with no money in.
[00:07:34] Speaker B: We're going to talk a lot about that in a couple of our segments that you gave 50%. And I will say, you know, sales salaries then and maybe even now, sales salaries tend to be pretty high if you're a high performing salesperson. And so I think any small business that wants to grow, sometimes that's the struggle, bringing in a salesperson. You know, if you can't afford to pay them that kind of salary for compaig, you're going to have to find other ways and other perks to bring that help in. Because you can't grow necessarily if you can't bring in clients. Right.
You have to be able to sell.
Would you say when you made, when you were thinking about the offer of bringing in this salesperson, did you consider making her an employee first?
Yes.
And. Well, and I wanted her to be. No.
[00:08:26] Speaker A: You know, I wanted a business partner.
[00:08:28] Speaker B: You wanted a partner. You really wanted a partner.
So that that kind of spreads out the responsibilities. Right. So that you don't feel you're carrying it on. And a partnership is wonderful.
They're very difficult to maintain partnerships as you grow because people grow in different directions. Did you formalize your shareholder agreement when you thought about 50, 50, when you. Which as a CPA I probably would have told you, don't do 50, 50. I would have left you at 50%, 51 and her at 49.
Because 50, 50, you can have stalemates. Right. Did you, right from the beginning have a shareholders agreement or.
[00:09:06] Speaker A: We did.
[00:09:07] Speaker B: Okay, and what did you consider putting into that agreement?
[00:09:11] Speaker A: Well, you know, we put in.
Well, we put in at the time what we thought the value of the company was. We put in a buy sell agreement as well. Within that agreement, you know, we each had 50% shares.
We talked about competition, about if we were to leave, you know, competitively, you know, would there be a restriction of where we worked or what we Did. So we did all of those things, I think. Right.
But.
Well, I mean, I don't know where you're going to go with this.
[00:09:54] Speaker B: You might want to say what didn't go right. What, what do you, what do you.
[00:09:57] Speaker A: What didn't go right is that when you enter into agreement. I didn't have anything that really said in that agreement. If she did anything that would harm the business in any way, and I'm not saying nothing to do with stealing, but in other things that could harm the business, I didn't have in there that when you're representing the business, you're also, not only are you an owner, but you're an employee of the business as well.
That wasn't spelled out enough? I don't think.
[00:10:39] Speaker B: So. Let me ask you something. You're talking some of those things you talked about, you know, buy, sell. Some of our audience won't know what that is or shareholders agreement. Did you have legal advisors, did you have advisors to help you even negotiate some of the clauses that you wanted to put into how you're going to work together over time?
[00:10:58] Speaker A: No, I'm going to say, I will say we went to top attorneys in Atlanta. That. But there was really no.
They drew up what they thought would be correct. We were blind to the fact of what should be in a contract.
They formed new articles of incorporation. Then they, you know, we had the contract, but that was pretty much it. It didn't say.
It was just a standard contract, basically.
[00:11:30] Speaker B: Hmm. And did you have a single lawyer representing all you and the company, or did you each have your own attorney?
[00:11:37] Speaker A: No, we. We had a single attorney.
[00:11:40] Speaker B: So I would say, you know, in how I've worked with businesses over the years, one, it's good to have both your CPA and your attorney on the phone. Each person in the negotiation should have their own attorney. Not necessarily in the negotiation part, but over, you know, overseeing and looking at things. Because legal agreements are, well, there's the legal requirement, but there's also the emotional side you are trying.
As with exit planning, I said 50% of exits are unplanned. One of the reasons is disagreement. You're trying to look at that agreement and kind of foresee, you know, when business is tough, you know, what, what things will be put in there, what you just mentioned about, you know, representing the company, those things. So I think maybe that might have made a difference over time that led to eventual disagreements.
And we're going to take a break for a moment and then I want to come back. I did want to get into the growth stage and also when you started talking about selling the business, because that's going to be important too. And this particular segment we're working on, which is what it really means to sell a business and all the emotional things that you actually go through when you sell a business.
So how can people find you, Roz, if they want to.
[00:13:07] Speaker A: So I'm on LinkedIn. Obviously, they can just pull up my name. I'm in LinkedIn. They can find me through WPO, Women Presidents Organization as well.
You know, I do a lot of mentoring, as you know.
[00:13:22] Speaker B: I do know, especially, you know, and I think we'll want to focus on that because we're talking about your business. But you have mentored many businesses for significant growth. We'll be back in a moment. Stay with us. Ross has so much to share with you on growing your business.
[00:13:57] Speaker A: Foreign.
[00:14:10] Speaker B: Welcome back to Balancing Acts. I'm your host, Linda Hamilton, CPA certified exit planning advisor and systemologist. We're talking with Roz Alford, who is a mentor, a business coach to many growing businesses. We and she would also built a business from startup to $150 million and 800 employees selling that business to her business partner.
This entire show today is about selling a business, what it really means to sell a business. We've had an M and A expert on. I'm a CPA and Ross is a business owner. But it's very different when you sell to an outside buyer than when you sell to your business partner or to employees. And Roz was also facing a health challenge at the time. She was selling her business and negotiating with her partner. So we want to talk about that because it's not uncommon to find that situation happen either selling and or with personal challenges. So, Roz, let's talk about some of those hidden difficulties of negotiating with your partner. Then how did your illness shift your thinking about the business itself and did you want to continue working? What was going on and happening at that time? Because not everyone exits when they're.
[00:15:33] Speaker A: No. And I gotta go back a little bit if you don't mind, because when you're looking for, when you're involved in a partnership, I think it's important that you know everything about that person. You have to share the same values.
The problem that we had was we were on opposite sides of the spectrum and it was we after, after we got to 25 million, which was with about two years, a little over two years. We already had offers at the time for like $18 million. And we both just said we're not selling.
We're growing, we're growing, we're growing. We're not going to sell. And again, probably at that time I was thinking about it, but my business partner was not.
And as time went on and our values really changed the way we looked at the business and what have you. I knew that we should. I wanted to sell and, and it works one way if you want to sell, but if your business partner does not want to sell, it makes it very, very difficult, especially if you're 50% partners. And I will tell you, I tried everything. I looked in, I looked, we did evaluation. I had ey do evaluation of the company, but there was no moving my partner to want to do it. I even looked into do. We looked into doing an ESOP, but there was still no movement.
Then in 2015, when my husband had lung cancer and he was doing better, I was diagnosed in October with breast cancer that had metastasized and had just started chemo. And we had decided we would go on a cruise in December, the second day out on the cruise, my husband passed away.
And it was a shock, obviously.
And that happened on December. That was on December 18th.
And it was a shock being diagnosed with cancer. My doctor had kept telling me all the stress I was going through, that cancer feeds on stress, that if I didn't do something about cutting back, especially while I was on chemo, that she would no longer be my doctor. I mean, it was. And I was, at that time I was going to MD Anderson. So it was a.
An awakening.
So I can't. Took few. I took like 10 days off or two weeks off, and I came back to the office on January 3rd and I made the decision, listen, just buy me out.
The only thing I ask is I want a cash offer, I want no debt, and I will not stay in the business, but I need you to buy me out as soon as possible.
And that's how we began. I mean, I didn't even know what price. I'm going to be very honest. I probably would have taken anything.
I did go to a financial. I sat down with my financial advisor and I said, listen, here's what's happening. This is what I'm going to do.
And then they came up with a price, a cash price.
And of course, she, you know, then I present. She.
She actually presented to me first.
And I came back with a little bit different offer, a little bit bigger offer. But as it turned out, you know, when I sat down with my. My advisor, it turned out for me by getting the cash up front, I did okay.
And I had no debt. We had a line of credit. We owned our building. So there was a mortgage on the building that was taken over.
And so I was out. And I sold within three months. On April, on tax date April 15 of 2016, I was out of the business.
[00:20:10] Speaker B: So I can tell the emotional pain experience. Okay.
And that is what happens. There's so many of those stories across the country of, you know, something a sudden. The sudden event happening, whether it's illness, your husband dying, and having to go through that while you're ill and negotiating.
So the emotions complicated the sale.
And one, your own desire to get out.
It could have been different, possibly if she'd been a different partner, right?
[00:20:49] Speaker A: Oh, yeah.
[00:20:51] Speaker B: And perhaps you could have stayed in if your core values had been the same and things like that. So I think people who are in partnership situations, no matter how small your business or how large, you have to think about that, because there it is, very draining to pull out.
Was there a certain amount of resentment while you were going through this negotiation? And how did you deal with. How were you even able to talk to each other?
[00:21:19] Speaker A: We couldn't. But we had not been talking to each other for the last three of the years that we were. In part, we were partners for almost 15 years.
The last three years, there was very little talking. We were not in the office at. I. At the same time, she did a lot more traveling, so it was difficult. The worst part about everything is that I was all about our employees.
She was not at all.
And right, wrong and different. We made the decision not to talk, not to let our employees know what was going on behind the scenes. As far as me selling my employee, you know, my. My leadership team, I did not include them.
You know, my son was part of. I had. My. My son worked for us as well. He. I. He was the only one that knew from the leadership team.
It was a very, very difficult. And the day on April 15, the day that everything became finalized, we pulled the company employees together via.
Well, it wasn't Zoom at the time, but similar to Zoom from.
I had them across. I had employees across the country and in India and told them that I had sold. Now, that caused a lot of resentment on the part of employees against me. Against me, I'm going to say, because.
[00:22:59] Speaker B: You sold and didn't tell them. And so there again, when it comes to. You made it 15 years as a partner. Okay. The last three were difficult. Many partnerships fail, which is one of the reasons advisors, CPAs and lawyers try to get you to, you know, kind of visualize things that can go wrong. People grow apart. Right. They grow in different directions and mergers go in different ways. So it's important to understand what you want in a partner beyond their ability to sell. Right. The core values, how they feel about the employees.
So if you could advise others, what would you have?
What could they have in place before a crisis hits? Is there anything they could do differently?
[00:23:48] Speaker A: Well, I think that you had to believe that you were in total alignment. And sure, we knew each other. We kind of, you know, we went to dinners together before we decided to go into the partnership.
But you don't really know a person's values.
I should have done more homework.
[00:24:13] Speaker B: And.
[00:24:14] Speaker A: Got more information about how it was where she worked in two other or three other companies.
I didn't do that.
I just knew she was really good and I wanted us to grow and, you know, so I should have done more homework.
I don't know how you find out really about a person's values. That takes a while.
[00:24:42] Speaker B: Yes.
[00:24:43] Speaker A: And I will tell you. We began having disagreements probably at the 10 year mark and, and really big disagreements. And the comp. Our internal staff knew there was issues and I'm going to say 90% of the staff was on my side. Right. Because I was like the mom who gave in to almost everything and tried to make it nice and work for our employees. I was hard when I had to be, but it was, I wanted to make sure that they had, they were working in an environment that was a good environment for them and that they would want to come to work for us. And you know, we even, we even went to a psychiatrist that dealt in partnerships.
I mean, this was like going through a divorce.
[00:25:38] Speaker B: Of course it is.
[00:25:39] Speaker A: I will tell you that. They told us after four meetings they took us each aside and they said, you need to get out of this partnership.
[00:25:51] Speaker B: I'm going to stop you there for a minute.
This is a cautionary tale for some of our owners. Yet you also.
There's always both sides. There's the positive. You grew that business together to $150 million.
What we're trying to show is both the, the pros and the cons of this and how to be careful. Stay with us. We're going to talk some more.
Roz, thank you for sharing your, your experience. I know it's a painful experience. We'll be right back.
Welcome back to Balancing Acts. I'm your host, Linda Hamilton, a CPA certified exit planning advisor and a systemologist. We talking with Roz Alford, who is a business coach and mentor. She's also a chapter chair of the Women Presidents Organizations, which runs peer advisory meetings for women business owners across the country. Multimillion dollar business owners. And we're talking about Roz's business per se, how she built her startup to $150 million and 800 employees and also how she has coached others to grow.
Right now I want to talk about leadership team. How did she actually grow that business into an asset that she could actually sell? Roz, you mentioned while we were on the break that the business could run without you. Many businesses can't. Most, you know, across even, even in, you know, among some of our colleagues. In the Women Presidents organization, the business owner is very controlling and does everything.
You brought in a partner, but what else did you do when you were the operations person to make sure that this business was resilient and could operate at its peak without you in the weeds on things?
[00:28:09] Speaker A: Yeah, I think that, you know, I knew how from having been in the corporate world first, I knew how things had to run.
I knew that it couldn't just be a mom and pop organization. As we grew now as we grew, what takes you, and you hear this from everybody, what takes you to 5, doesn't get you to 10 million, doesn't get you to 25 or 50 or 100. And there have to be changes. So there were people that were in my organization that my controller was with me for the whole time I was there. She was a controller. And I knew I needed somebody that would be great in accounting. I knew I needed, I had a HR background as well.
I needed strong HR people eventually.
And I ended up then also having a, having as we grew, obviously we brought in a cfo, we brought in a lawyer as well. And I had my business partner always led sales. So we didn't really have a leader in sales other than her.
And there was lots of always turnover on that end because that group was just run. They were like a separate part of the organization. The, the rest of the business ran very, very smoothly. And you know, listen, did I have to make changes? Absolutely.
And some people didn't like the changes. As we grew, some of the people that were on my leadership team chose after 10 years or 15, 10 years, 15 years that this wasn't going to work for them. They wanted the mom and pop organization. They didn't like the growth.
And as you get bigger, you know, there's a lot of strategies that have to be going in place. And when I looked at Hiring. I always wanted to hire people that knew more than me and advised me. I didn't want to be the one that was in control of everybody else because then it would just. There would be no growth because I didn't know how to go to 100 million. You know, I needed a little bit of help on that.
And I think that's where a lot of companies fail. And I will say that's the one area that.
The one thing about the business that kept the stability there and with our clients is that operationally we were intact.
We ran really, really well, and we provided people that were as good as we were a small company at that time, but we were providing people that were as good as Accenture and Deloitte and EY and actually won jobs that they should have been winning based on our track record on the people that we brought in to run projects for those companies.
That's something that I think is where a lot of companies fail. And when you're talking about valuation, you know, if you're having a proper valuation, they're going to talk to your entire leadership team and what they want to know is, can that business run without you? Because if that. If there's a sale and you're no longer there and everybody depends on you, the company isn't going to get sold for very much money.
[00:31:52] Speaker B: Exactly. Let's. Let's go back to leadership again for a moment. You've been a long time and you. You're right, you reached all Those st. The 5, you know, 1 million, 3 million, 5 million, 10 million. Right. Every. Everything required change.
So hiring people in the beginning, they might be part of leadership, even if you're making all the decisions. When did you actually start to bring in those people? Was that before you had a partner.
[00:32:20] Speaker A: Or after the controller? And I had a person that was in hr, I brought her recruiting.
Right. I brought that in. That was all there. Prior.
[00:32:33] Speaker B: Was that in your first five years? You know, I think what I'm trying.
[00:32:36] Speaker A: I'm going to tell you my first 10 years, basically, you know, I had like an accounting department with probably four or five people in it.
I had somebody that had to work on contracts. I sponsored a lot of people that were on green card that at the time were, you know, needed to be sponsored.
So I needed some legal, but I contracted that out.
But then as I grew, I mean, this is what I. Everybody gets like and says, you know, when I'm talking about how we grew and, you know, we had a cfo, we didn't bring a CFO into play until we were probably at about $40 million.
Prior to that, our controller was fine.
[00:33:29] Speaker B: You know what's unusual? That you're. What you. What I'm. And I want to give you a lot of credit for seeing this is many business owners I talk to that are smaller and they're growing in their first few years, they don't bring in the accounting team or the financial help. Right. They often do.
One person does the bookkeeping. You know, it's like a second thought. You clearly thought about that up front. We should actually, for our audience, tell them, you know, the difference between the controller and a cfo, which is really a very different role. And a controller is different than a bookkeeper. I don't know, you know, how. How much financial help did you have on the inside, as opposed to outsourcing to a CPA that you only talk to once a year?
[00:34:17] Speaker A: Well, we didn't talk to a CPA once a year, so I had our CPA involved quarterly.
And I had a good relationship that if there were issues or anything that we didn't know.
My controller, I mean, she was with me from two years after I started the company.
She was a controller, but, I mean, at that point, all I really needed was a bookkeeper when I started.
But she was willing to go into that role.
But then, you know, she grew. So there's a difference between somebody logging in into a general ledger and, you know, having accounts receivable and accounts payable. A controller was able to really, you know, pull information and reports and, you know, where were we doing things?
What things were we doing that was correct and what things, where was money going that it shouldn't go?
But it was still very, very easy. When you got. When we got to 40 million, my controller could only do so much. She couldn't.
She couldn't figure out, what do I want to say? The word is she couldn't think ahead and say, okay, this is where you're going to. This is what we're going to need for the end of the year. These are.
This is what we're going to have to do. Linda, you. What do you call it?
[00:35:40] Speaker B: It's forecasting.
[00:35:42] Speaker A: She couldn't forecast properly.
She did a little bit of it, but we knew we needed a lot more.
And we went through two, almost three CFOs, from 40, you know, to over 100 million. So because not all CFOs work out either.
[00:36:05] Speaker B: Right. So it's recognizing this that you had to be on top. I often say, you know, the numbers matter and the story behind the numbers matter. You need both.
And oftentimes it's the financial side that business donors don't understand. And what does this have to do with selling your business?
You know, you're building something that you want to be an asset and you want to be prepared for growth, for changes, for, you know, adversity in the market.
And you did all of that through all those stages of growth. What would you leave as the last? You know, some advice for the entrepreneurs in our audience who are listening to us, who are thinking either about, about maybe about building that leadership team that they don't have, maybe that they barely started yet.
[00:36:56] Speaker A: Well, I think that you have to know when and where, when and how, who do you bring in and when.
And generally it develops. Your clients almost are the people that are going to tell you when you have that, when the need is there for additional growth. I mean, I knew that as we got into contracts, I'm going to use that.
There was no way that my HR person could handle contracts with companies like an AT&T, A, UPS, a bank of America. There was no way. It was too complicated. I had to bring in legal and, you know, I interviewed lots of people. And I, and I will say what I would tell everybody is that you should be looking at your business every year and think about is this the year that I might sell and how do you prepare? Because you need everything. Your contracts have to be in place, your financials, definitely. It can't be. I always tell this to everybody. You can't look at your financials once a quarter and think everything is okay.
You need to be looking at your financials all the time and know exactly where you are and know the dollar amounts of where you are at any point in time.
Most entrepreneurs don't do that, you know, and I'm going to tell you that at the beginning, I didn't do it either. So I was not organized those first five years of business. I was just wanting to get the business started and took any part, anything I could, any, any piece of business I could get.
That's what we did.
[00:38:46] Speaker B: And you know, you're such a role model for so many businesses who would like to grow because so few do. And you know, understanding your financials is key to business growth and success. Stay with us. We'll be right back and we'll talk to Roz more about growing your business and selling your business.
[00:39:34] Speaker A: Foreign.
[00:39:39] Speaker B: Welcome back to Balancing Acts. I'm your host, Linda Hamilton, a CPA certified exit planning advisor and a systemologist we're talking with Roz Alford in this segment about both growing a business, a very successful business, and selling that business. And we want to, I want to shift gears a little bit this time to talk about preparing for sale. And if you're starting to think about selling a business or even if you start to think about it from the very first day you formed, there is a great book out there, Built to Sell. It is about a business who started day one thinking about how they would grow it to be able to sell it. It is about readiness and preparation.
Roz, let's talk about. You mentioned earlier that while you sold your business because you went through an illness and so you were, you really wanted to exit immediately, you didn't want to think about anything else, but you did think about selling before that especially, you know, I don't know if it was, you know, at 50 million or 75 million, you know, where you started to think about that. What would you say is different there?
[00:40:48] Speaker A: Well, I'm going to say that I never thought I wanted to sell the business.
When I first started the business. I thought this would be my son would, you know, I have a son. And I thought this would be a legacy and, you know, this, the business would be my legacy. Right.
Well, I think the first time I ever thought about selling was when I went to secure a line of credit and I gave the bank. I mean, I had, we had all our financials were in order and everything. But he said, so what do you really think the value of your businesses?
I said, I don't, I remember sitting there saying, I don't know.
I said, well, I mean, we're doing 25 million dollars worth of business. I guess my business is at 25 million or whatever.
And then he started to talk about multiples and things like that, which I had no idea what it was. So I had to go back and do some research.
And one of the advice that, the advice that he gave me is he said, you know, this is a time when you really, this was just when I took on a business partner and he said, this is a good time. You need a baseline. You need to know where you stand today and the value of your business and then do evaluation.
So I, I interviewed two or three, I think three people and he was a local person, but he had, I, I made sure that they dealt in the same industry or had experience in my industry and got our first valuation.
And then after that, I think we used them again another three or five years after that.
And then through WPO I met people from. At that time, it was Ernst and Young, which is now ey.
And they suggested that, you know, what you need. Your business has now grown.
You are at. I think at that point we were like, at 60 or 70 million dollars. And they said, you need to have a good valuation done.
That's how we chose ey.
And they did it.
They did it for us. They did it again when we reached 100 million.
And that was a whole different process. And I can't even begin to tell you. I mean, they spent six weeks going and working in our office, going through every contract, going through our financials month by month, for. For five years.
And they really worked with my leadership team. They wanted to know, can this company really run without the two business, without the part, without the two owners. Right. Two partners.
And then they came up with a price.
[00:43:42] Speaker B: So, you know, that is, I think, the essence of, you know, you're growing an asset. And that's such a clear picture that you just painted. I want to just think back a moment again to when you started this business. Even though you thought it would be a legacy business, you joined the Women Presidents Organization. I am also a member.
And organizations like that can really help businesses go through all those phases because you're not doing it alone. Can you talk a little bit about how being a member of the Women Presidents Organization, your own peer advisory group, kind of like an advisory board, did that make a difference in how you grew and even when you went through your sale?
[00:44:33] Speaker A: Oh, yeah, I. I'm going to. And I have said this many, many times, without wpo, Women Presidents Organization, our growth would not have been there. And all the issues that I had, partnership issues, if it wasn't for wpo, at least being my sounding board now, they acted. I used it. My peer group, I used it as an. As an advisory group, as my board. They were my board of advisors.
And the problem is sometimes you don't always listen to your advisors. So I will say there were times when, in hindsight, I should have done a little bit different things.
I could have ended the partnership sooner than I did under better circumstances. But I was so worried that the business would fall apart, that my clients would be upset, my employees would be upset that I hung in there for, like, 10 years trying, you know, trying to keep business going. And it did grow. It did grow. There was no way I wasn't going to let it grow. But if it wasn't for wpo, I don't know how I would have gone through the personal challenges I had and the business challenges that I had.
And, you know, I mean, there's different levels of wpo, and as I grew, I moved into those different levels so that I would have experienced advisors that were. Had dealt with similar issues that I had. And.
[00:46:12] Speaker B: Again, that it's very difficult to grow a business that is also an asset. Like you invest in a stock, right? You want something that will provide a lifestyle business, or you can sell it when you want to. And I want to encourage the audience to find support groups like that, because otherwise we're totally alone, right? We can't see our own blind spots, we can't see our own gaps. And I know you were at every level of growth because you were one of our larger members businesses.
So if we were to talk about, you know, how a business should maybe join that first group and to reach that first. The first milestone, let's say, in getting to a million dollars, how would that, how would they do that? Because I know you count. You've counseled a lot, you've worked with Make Mine a Million, and you've mentored a number of very small businesses.
[00:47:14] Speaker A: Well, I mean, at the time, I didn't know that there were even. There was an organization like this there.
Back in 1989 when I started, or 1990, I guess, really when we started, I didn't have a mentor there. I didn't know who to turn to, you know. And, you know, I remember meeting Marcia Firestone, who was the founder, at a conference, and she took me aside and, you know, she said, are you trying to handle all this on your own? And blah, blah, blah. And she said there was a slogan that they used, it's lonely at the top.
And I will never forget it because I had no one to talk to about the challenges I was having within the business at the very beginnings, you know, growing from a million to 5 million is a big step.
You start doing. You're. You're still mom and pop, but you're growing. You're. You're. You're going now from being an infant to kind of becoming a teenager, a young teenager. And, you know, life changes.
And I didn't even know organizations existed.
There are organizations out there today that are out, that are there for businesses that are not even at a million yet, that are growing from they just started. They're a startup. They may be at 100,250, and they need as much support as the person at $100 million.
And they can't. You can't do it on your own. I don't know how we manage, but we did. I just can tell you that after I joined wpo, things were a lot easier because I did have people that I could ask and could talk to without being, you know, they were there for me, you know, so, you know.
[00:49:19] Speaker B: And that's a little bit like, you know, we had this. I spoke with an M and a advisor about how he helps business owners who want to sell. And when they first come to him, he actually said, most of them are a mess. They're not really ready to sell. They're not. They don't have everything together. They're still too controlling. And emotionally, it's very hard to let go. The same emotion is there when you're trying to grow and you're going to hire that first employee, maybe the third employee, you know, and.
Or a partner, which are big steps. And you're worried about one, about affording it, right, Paying for it, and the other is how it will work out together for you. One of those biggest steps, I think, in growing is hiring the first good people and any people and not being stuck in the weeds. So what would you recommend? Again, let's think about our smaller businesses. This has been a great conversation on building an asset, but many are going to say, you know, I don't have anything close to a million dollars yet, but there are businesses who are sold who only make a million dollars. Right. And you don't have to be at 100 million.
[00:50:32] Speaker A: Absolutely not. And I will tell you, if my one piece of advice is, again, know your financials, because it isn't about revenue. It has nothing to do with revenue. It has to do with profitability.
There are businesses that are at 1 million that are more profitable than a $5 million business.
My business, even though we were over $100 million, our profitability, we made more money at 50 than we did at 120. And that's because you have to put so many different layers in place as you grow. You need a cfo, you need an attorney to be part of your staff. You need so many, so much more.
You need a place to house your employees. You know, you no longer can go from working in the kitchen, and now you've got an internal staff of 60 or 70 people. You have to have a place to go with them, you know, and everything costs money. And that's where I believe the biggest thing that I learned from the very beginning, and I learned this from, from wpo, was that you had to read those financials and know them forwards and backwards. And I took many, many classes just to learn that. Some of them that were offered to me by WPO, I was women certified through WeBank and I got to go to University of Pennsylvania on a class through through wpo. I went to Harvard.
But all of the classes that I took that had anything to do with building my business all centered around financials and having the right people in place.
[00:52:30] Speaker B: Thank you so much, Ros. And I think you know my takeaways, I think from this segment and really from all four, is one, if you want to get your business to, say, a valuation of 5 million, which is where Cliff Gardner, the M and A advisor who actually shared his insights with us, you've got to grow your business well, you've got to be prepared. It is about readiness and preparation and finding the support you need. So I hope that you got a lot out of this episode and that you will look for support groups if you're in the growth phase. And if you're thinking about selling, think real hard about preparation and checking out the resources we've talked about to help you get there. Thank you, Raj, for sharing your insights. You've said that people can find you on LinkedIn or the women Presidents Organization because she's one of our wonderful chapter chairs.
Thank you. Come back next week.
[00:53:29] Speaker A: This has been a NOW Media Networks feature presentation. All rights reserved.
