[00:00:00] Speaker A: Sam.
[00:00:30] Speaker B: You'Re listening to Balancing Acts where we help you grow profit and scale your business without losing your sanity. Because while the numbers matter, it's the story they're telling you that really drives smart decisions and lasting success.
I'm your host, Linda Hamilton. No, not from the Terminator movies. I'm a CPA, a certified exit planning advisor and systemologist. And for 30 years I've been looking under the hoods of businesses to terminate problems that keep you stuck. And speaking of stories, today we have a great guest, Dara Forleo, and she's going to tell us how she turned her love of animals into a 20 year business and built a school that's transforming an entire industry.
Dara, welcome to Balancing Acts. I'm so excited to learn more about the whole pet grooming academy.
[00:01:23] Speaker A: It's a mouthful.
[00:01:25] Speaker B: But it says that. It says exactly what it is, an academy.
[00:01:29] Speaker A: So we are. Yeah.
[00:01:31] Speaker B: With your story, I mean there's so many in our audience who have a passion for something that want to build a business.
So what inspired you to enter the, the pet care world?
[00:01:43] Speaker A: Well, I, I always grew. I grew up loving animals and horses.
Dogs, they go hand in hand and it, it made sense for me after high school to go to grooming school and from there I fell back because actually my whole degree is around racetrack, racetrack management in the thoroughbred industry, horse racing. And I, when I moved to New England, I had to fall back there. There's no racing in New England and I, I didn't have a racetrack to work at anymore. So I fell back on dog grooming.
You know, as a, I, I always knew that I, I grew up in an entrepreneurial home. My, my dad and my parents have always been business, business minded and I just stuck right with that and that's what I did. I opened my first grooming shop. Within the first eight years I sold four shops that I had opened and started and moved and realized you know what startup I like? The startup I did not like the day to day.
I, I wanted a business that could grow and continue to sustain without having to do everything that came with the day to day of, of pet grooming. Which sometimes, you know, it's not for everybo.
And I, as much as I love it and love the animals, I love education more and teaching about it is where that passion fell and the school came about.
[00:03:29] Speaker B: You know, I'm glad you shared that because every business, you know, every business, probably every job and career has parts of it we love and parts of it not so much. Right. So I think that it's really interesting that you said that about the pet grooming and you know, you mentioned a little bit about the early days about the parts of the pet grooming business and you clearly love all animals from horses to dogs is, you know, it is quite a change. And to be able to make that love into a business is, I think, very inspiring to many.
So when you started, you mentioned education, you started your academy for pet grooming.
There must have been a gap you saw in the market. What was it that had you do something differently in your own academy?
[00:04:20] Speaker A: So the academy finding qualified employees, it is not recognized. Our industry is not recognized as a licensed industry.
We're not governed, we have no governing body. We, we are kind of the wild west in the pet care industry.
And formal education, like I said, I'm a serial scholar.
The more I can learn, the, the happier. If I could be a full time permanent student forever, I would have done that because I just love learning.
[00:04:58] Speaker B: We have a mutual passion there.
[00:05:00] Speaker A: It made sense to have the school, but as the school has grown over the last 10 years, we have morphed from being in person teaching entry level people coming into the industry to recently becoming online only. And now we shifted our focus from being and starting entry level people. So we don't do that. We focus on the industry itself and the professionals that are out there. And we are really actively looking to get this industry recognized as a trade and a skill.
And with that comes formal education. And you can't be recognized without there being any types of formal education for groomers. And so we're, we're one of the only ones doing this right now is being able. It's like your GED and pet grooming, that your groomer can come to us and we know where you're at, where they're at in their education or that they can do the physical act of it. But now let's put all those missing pieces together and get that formal education and get your diploma. Because after all, I mean there's.
You want your cosmetologist to have a license, you want your massage therapist to have a license. We don't go to people that don't have recognized credentials.
And why would we allow that for our pets?
[00:06:36] Speaker B: Very good point. And you know, now you want to recognize that you also won an award, educator of the year. So clearly you are not only have your passion for how to take care of pets and groom pets, but how to teach others to do it with the same care and quality.
So congratulations on that.
[00:06:56] Speaker A: Thank you. That was for business.
So we, we are, I have a great team of educators who do everything in between. From, from. We, we teach everything from business to skinning coat. And, you know, it takes a, it takes a group of us to make exactly what we're doing.
We have an animal communication program, and that's something that most people are like. You what?
[00:07:29] Speaker B: Well, why don't you tell us a little bit about that? The animal. And you're talking about people who have businesses or possibly they just have a career or a job for someone else. Does this apply to anyone who would like to work with animals?
[00:07:43] Speaker A: Oh, oh, the animal communication one. Yeah. That is if you have, you know what, people have some, there are some talents out there, and it's more than grooming.
There, there are some people that have some, some underlying. And I'm sure they got that. I, I honestly, I'm, I'm not as knowledgeable in it as Latifah is. But when you can communicate on a different level with an animal and you can help ease people's minds about what's going on with their pets or what, or with the animals that they work with, I mean, that's just a gift in itself. Whether you believe or not in.
Is truly a gift to be able to give somebody back that empathy and compassion.
[00:08:36] Speaker B: Yes, that's so true. So you mentioned that you changed your model, your business model of education to online, which is. That's, that's, you know, that's a big change, I think, because you're working with animals, right. And learning about animals. You need to be hands on and touch. But how did you keep high standards in that transition while you were expanding your business to that?
[00:09:02] Speaker A: So now that we're online, we're taking it a different level. So we're, we're, we're hoping that people are, or we, we look and people, the groomers that are finding us have been in the industry for an extended period of time.
And so they're coming to us to learn more or less the whys. Right? Because you look at an animal or the dog or the cat that we're working on and that's our canvas. So we're like the artists.
And if you don't understand the how and the why of what you're doing, that's when animals get injured. And so we're helping get that to the groomers because that's what's missing in our industry is the how and the why.
[00:09:51] Speaker B: And so the reality is you've stayed relevant.
We had. And changes for 20 years. Most businesses, 70% of businesses actually fail at the 10 year mark. So even though they make it so what would you share with our audience for someone who's thinking about maybe taking a business in your industry?
But what is it that helped you be successful and stay relevant?
[00:10:16] Speaker A: Tenacity.
[00:10:18] Speaker B: There you go.
[00:10:21] Speaker A: No, but, but you do, I mean a lot of people don't under you come into a industry of oh, for instance, I mean we're a service industry, we're service based and restaurants come and go. Right. And if restaurants are, are staying, especially small local restaurants, if they're staying the same for an extended period of time and you're not changing and not coming up with, with new drinks or new plates or new menu, you know, you, you've got to change and you've got to take those risks. As risky as it is, it was a huge risk going online.
We're, we're still, I mean I look at it as basically I'm a brand new business all over again. And yeah, I have this 17 plus years of experience.
And then in one six month span we go, you know what, this isn't working anymore and we got to readapt and oh look, we're going all online and literally it happened in six months.
So it, it's, it's still, it's like a brand new business all over again and we're adapting every day with what's going on and trying to reach more of a global scale versus as an in person school, you can only reach a small community around you.
[00:11:46] Speaker B: Thank you so much for sharing. I think some great insights there for anyone who wants to start a business in any industry that you've really kept your ear on the market on what is changing, what you need to change. Just like you mentioned restaurants as well. That is the, that's really how you have lasting success in a business, doing what you love as well as serving your marketplace both as an educator and taking care of animals. So I hope you will all stay with us. When we come back. Dar and I are going to talk about how you can build a referral based business without a huge marketing budget. So stay with us please.
If you like what you're watching. I hope you will catch this on Now Media Now Media TV. You can watch us 24. 7 on Roku, on iOS or your favorite podcast. So whether it's news or lifestyle or culture, I hope you will tune in. There are many shows bilingual in Spanish and in English. Stay with us.
Welcome back to Balancing Acts. I'm your host, Linda Hamilton. In our last segment we were talking with Dara Forleo about how she turned her passion for animals into a thriving 20 year old business and a top tier grooming academy. Now we're going to shift gears and we're going to talk about something every business owner wants. You know, trust, loyalty and growth that's not just about marketing and finding marketing but based on reputation and the reputation of your brand.
Dara, I can't wait to talk to you about how you've done that because it's something that's very difficult for business owners to actually have their brand be known at all and you've successfully done that with your school.
So let's talk about how you, you know, what makes people eager to refer your school if they're a pet groomer or someone who knows a groomer.
[00:14:19] Speaker A: So really as we started growing and I went from grooming shop to grooming school teaching one on one students coming, then we shifted to an online model.
Our floor students came back for more titles and as they're getting out there and they're seeing and, and actually a lot of our educators are industry speakers and teach at organization trade shows and, and all over the world.
We've just really been branching out and our, our name is, is starting to grow.
All of us are pretty active on social media and we're really as, as daunting as it is.
I have a love hate relationship with it to be honest. Social media is, is hard and I have hired numerous people to do the job for us and they don't do it well. They just don't know us well enough. And I think for companies in the service based or even as a school as small as we are, the more we put ourselves out there the, the more realistic it is and it doesn't feel like it's somebody else because you can clearly see if you look through our social media, the differences and the changes and even the growth that the business itself has had since starting oh gosh, I think what 20, 2015 maybe. I mean Facebook's been around for a while now so we've been been active on it. So looking at that change it's, it's really interesting to see the growth and how we might not have a lot of followers but it's not always about the followers. It's about the content that you're getting out there. It's not about the likes and the clicks and the comments but it's still about what you're putting out there. And our students are the ones who tend to come back, like I said, and talk about us and showcase or again, you're seeing new logos, new titles being out there and people go, what is that?
[00:16:46] Speaker B: Right.
[00:16:46] Speaker A: I've never heard of that. What is that?
How did you get that?
Oh, well, I went to school for it. You went to school for that?
[00:16:55] Speaker B: No.
[00:16:56] Speaker A: You can do that. That's a thing like.
[00:17:00] Speaker B: Exactly. And I too have a love hate relationship with social media. I think all of us that own small businesses do because it can seem like a black hole in a time suck. Right.
[00:17:11] Speaker A: It's so hard to keep it up.
[00:17:13] Speaker B: But it is important to be at least somewh consistent in getting your message out. It's kind of, you know, there isn't another way that's. It is called social media. It's not necessarily selling anything. Right. It's about going into a room and, and chatting with others about what you do and why you do it. So that's great. When we were talking backstage about how you connect both the tech groomer and the pet owners with understanding, you know, the care theirs needs. So you're kind of, you're working with both sides of, of, of your audience, both the service creators. And we do talk about that, about how that helps your reputation as well.
[00:17:58] Speaker A: It does. Well, as you know, I'm obviously a pet owner and when you think about, really I got into grooming going back a little bit and because we had a husky growing up and a keyshond and they got shaved in Kentucky at a groomer once and I was young and I was like, oh my gosh, I didn't think that was a thing. Like it was, it was pretty traumatic for them and how they felt and what was going on.
So it, it made me more aware. But there's no, A lot of groomers don't understand how to really talk to the pet owners.
And you've probably seen a lot of viral stuff out there right now. The industry is full of client shaming and a lot of, of poorly done videos of dogs being groomed. And, and it's scary. And it's scary to see that pet owners are seeing that and, and that they're either going to be for that or against it.
But we want them to know the truth about the industry and what really. There are a lot of amazing groomers out there and there are a lot of knowledgeable groomers out there and how do you find the proper one?
So our role is really. Yep. We're going to promote our students and say you first and foremost, you look for our Graduates because they're best. I mean, end of discussion. There's nobody better than our graduates. And I'll promote them 110% every day of the week.
And I want to shout their names all out there. Our educators are the best.
And if you're, you know, we want you to know and recognize that and recognize those titles and understand what to look for and who to trust your animals with.
[00:20:02] Speaker B: Exactly. You wouldn't go to a doctor. Right.
Or dentist. We get referrals for your hairstylist. Right.
When it comes to your students. Let's talk about your students for a minute.
It's not just about teaching them the, you know, rudimentary skills of pet grooming. They need the skills, need that important.
But this is a career as well as, you know, a care for the animals, their, their, their, their grooming and styling. So what is it that makes a great, great pet stylist besides, you know, technical skills and maybe personality as well or being aware of who they're caring for?
[00:20:44] Speaker A: That's a great question.
So a lot of it, yeah. Technical is great. And you have to, people look at the pretty picture they want to see. You know, that's clean, neat, tidy, goes home, but there's more to it. And, and again, I'm going to go back to, I refer a lot to the cosmetology industry because you want your hairstylist to know what they're doing with your hair, when they're putting colors and dyes on and when they're doing all of this. So our students are, are taught the hows and whys for the actions that they are doing.
And so they are getting a much more in depth education than just creating that pretty picture. So it's not just the external that we're looking at. You got to go deeper than that. We're not vets. We're obviously not going deep into the veterinary. You know, we're not here to, to.
We should never be saying, oh, that's an ear infection, or I think your dog has something, some blah, blah, blah. You know, I think this is a skin infection. Whatever it is, we should never be telling people what we think it might be.
Instead, it should be that vet referral and we teach that one of the, your biggest advocates is going to be your local veterinarians. And if you can get in with every one of your local veterinarians as a groomer in the area and that you're referring customers back to their veterinarians for the smallest thing, we see it first. We see the pets four Six, eight weeks. Your vet probably sees them once a year in an emergency.
So we know. Keep detailed notes. If your groomers are not keeping detailed notes and you're not getting a, a email at the end of your grooming session saying Buffy was wonderful, blah blah, blah, blah, blah. And I noticed this.
You might want to have it checked out.
Here's a picture. You should take this to your vet in an extreme circumstance. I, I've had students when we've been on the floor, I'll pick up the phone here, let's call your vet now. Let's have them see on your way home if you can stop and have it checked. Because this is really important because by the time they get home they're going to forget, something's going to come up. They're gonna get day their, their life gets back in the way. So make it happen right, right away before they get home because otherwise we get blamed and that's not fair for us to take the blame on that. So if we, we are really teaching that as a pet owner, ask the right questions. Too many questions is never enough. Ask more and keep asking until you get the answers you need. And same for the groomers. You should be asking more questions.
Oh, same as last time.
Same as last time.
[00:23:52] Speaker B: And I can really see why people have trusted the whole pet academy and you and your educators and your students to care for their pets. And the pet industry itself is a very big industry, right? There's, there's a lot there. People do care for their pets and want to take care of them. So you built, you know, a service that is trusted and that's where your reputation, even as social media builds it. But the reputation of the school too has been so important and that's what builds a strong business. How can people find out more about you online or your website?
[00:24:34] Speaker A: You can tell your groomers about
[email protected] and if you go to whole pet NHL.com like New Hampshire, because we're in New Hampshire.
We also have a pet owners page. I have a guidebook that our pet owners can download on what to look for in your groomers, how to find your groomers. I got a list of all of our graduates all over the world and where they're at and, and whether they're taking new customers or not. So we, they, they tend to book up quick.
They're pretty sought after individuals.
[00:25:08] Speaker B: Thank you so much for sharing your insights with us today about your mission as well as your business. And for those of you listening, when you build a reputation the way Dara has and of her school. That's how your business gets stronger over time. And I hope you'll come back for more Balancing Acts next week where we'll have another insightful episode for you with lots of tactics and strategies.
See you next week.
[00:25:33] Speaker A: Sam Foreign.
[00:26:03] Speaker B: Welcome to another episode of Balancing Acts. I'm your host, Linda Hamilton, a CPA certified exit planning advisor and a systemologist on Balancing Acts. We think of it as your guide to grow profit and scale. We know that the numbers really matter. They're very important for all businesses. But the story behind your numbers and the planning that goes into it and matters equally as much.
Today's episode I want to talk about.
When you're thinking of starting a business, it can be very overwhelming. Even if you're in business for a year, it's pretty overwhelming, too. Where do you start? There's so many different things you have to take care of and you're not quite sure what path to take because there are always conflicting information.
So today we have another CPA with us, Joseph Reyes, who's the founder of JL Reyes accounting, tax and CPAs.
He also has a master's in theology, which I imagine comes in handy working with taxpayers and helping them deal with so much stress. And he has a Series 65 and life insurance license. Joseph, I'm glad you're here to help us with both the practical and, and a proactive approach for business problems. So let's start with, you know, some of the things people should do first when they think about starting a business.
[00:27:31] Speaker C: Oh, thanks for having me.
And yeah, my theology degree, so I specialize in death and taxes. So those are the two sureties of life, right?
Yeah. Starting a business, wow. You know, that's, that's a big deal.
I've created a few small businesses, and each time, as small as it was, all the details that you have to go through and take care of.
Wow.
It's not for the faint of heart, let's just put it that way.
One of the things, the first thing I would say, especially in 2025, we are witnessing a new revolution in technology. We have artificial intelligence.
And what we have today can help you start a business a lot easier than it was when everything was paper or when the Internet was just in its infancy, if you will, or even when the iPhone came into being.
But the first thing I would say is you're going to feel overwhelmed. That's a given.
The big question becomes, why are you going into business and what do you hope to achieve? Most People are going to say, well, I just want to have my independence. I just want to make more money, take control of my time and my life and stuff like that, which is perfect.
But, you know, a business can.
It's like a baby. You have to treat like a baby. It pretty much owns you after a while. And then hopefully, once you hire people and grow, you might be able to take some time off and relax. But I will tell anybody who wants to start a business, first things first is what kind of a business?
What. What is the product or service that you want to sell?
And today, with the advent of Google years ago, there was a time when you can just go and buy some Google search information and figure out what are people searching for, what are people looking to buy.
And with that information, you can pretty much drill down on.
You know, this is a big demand. Let me go into this.
[00:29:36] Speaker B: Let me ask you, you know, even before we go into that. So let's say they're starting a business.
One of the biggest questions you often get is, okay, should I stay a sole proprietor? Should I be an llc? Should I be an S corporation? And you get so many different answers on that. So as you say, they do need the idea of what they want to sell.
And I think we should dive in a little bit into the tools that can help them. But what about the entity? If they're just starting or even in business for a year, whether they should change it? Can we just touch on that for a moment?
[00:30:13] Speaker C: Sure, absolutely. It's one of the things that people come to me most for. Besides tax planning, the entity is important.
The LLC entity is usually the best way to go.
Sometimes I like to quit that. Even a babysitter should be operating as an LLC simply because of liability protections that you get.
But an LLC can be treated as an S corporation, a C corporation, a sole proprietorship, a partnership.
So that's a question that has to be addressed very early on. One of the first things you're going to do is figure out which entity you want. So if you're going to business with two or more people, right off the top, you're going to be a partnership or an S corporation or C corporation. Each has its tax benefits. They all have to say a similar thing in common, is that they give you liability protection. And if you're going to be in business, half the battle is making the money. The other half of the battle is keeping the money from taxes and from lawsuits, especially if you're in real estate. Right. So that requires a certain level of expertise that we provide guidance on.
[00:31:24] Speaker B: And I think you're right. It's best to actually get guidance. You can get a lot of answers on the using AI or Google search, but they're going to be confusing and you're going to get, you know, some are going to tell you to go one way and some are going to do the other. It's not just about saving taxes, it's also about your operations and how you operate. Right. So you talked, when we talked earlier, before this segment, you were talking about planning and how important planning was to people and how early do you start planning for tax planning and things. Is that for a startup or what about if you're in business a year?
[00:32:04] Speaker C: Well, if you're making money right out of the gate and that happens, then you're gonna have a tax bill. And the trick becomes, when do I address the tax side of my business? And the answer to that is as soon as you start making money. But if you come to me, you're telling me you're starting a business, you're my client, I'm going to address all that right out of the gate. Because sometimes if you make the right decision too late, you may get stuck overpaying taxes anyway. Although the next year, you know, you may have gotten it right, but, you know, who wants to throw away $25,000, right. If they don't have to?
So we say right out of the gate. So we address a lot of the initial stuff initially, like what kind of a corporation or company you want, who's going to be in it. You know, we want to know about your family. Do you have kids? Can they work for the business? Can we shift income from you to the kids through payroll, all kinds of stuff that we can bring to the table to bring a lower tax rate to the client.
[00:33:05] Speaker B: And then I assume that when you're doing that, you're also getting an understanding of their goals. Right. What is it they're trying to achieve beyond just making money? Right. With this business to support their lifestyle, to support their families because they left a job. But you said earlier it is your baby and it is all consuming when you have a business. So you have to take care of your health as well.
When we talked earlier, we were talking a little bit about the different AI tools which we're using in our profession, but in everyone's using them. Some of it's just for copywriting. But when it comes to financial things or even getting tax answers, which I assume a lot in our audience is saying, I don't have to Call an account. I'm just going to Google the answer or use ChatGPT.
What are the pitfalls with using AI for some of these more important things, at least at this point in time?
[00:34:00] Speaker C: So I use no less than five different AI tools. And I mentioned to you earlier that we use Chat GPT for general stuff. And I asked chat GPT, a simple mathematical equation, an answer to an equation, and it gave me the wrong answer. And my response to the answer was just one word wrong.
And they said, oh, wait, let me check that. And it recalculated because I knew what the answer was supposed to be and it gave me the answer.
And I've actually asked my tax specialized AI programs certain tax questions and for research, and I kind of knew what the answer was supposed to be. And I paid 200 bucks a month for one program and it gave me the wrong answer. I went to another program just about, about as expensive, and it gave me the answer that I thought I was going to see. And sure enough, it was the right answer. So AI is not, at this point in time, not 100%.
It needs to be looked at and researched further. It gives you guidelines where to go. But the, the layman, no, absolutely not. Don't do your own tax research. It's good to get an idea, but to make decisions, absolutely not. It's too complicated.
[00:35:08] Speaker B: It could be really good for is.
Let's say people are researching things like that. How about ask it. What are the. What things should I discuss with my accountant? How. How can I discuss it? Because, you know, let's face it, accountants get busy and sometimes they're not quite sure what to ask. And so it might help them be prepared even to talk to a lawyer. I tell people the same thing. You know, when you're going to something that's kind of a complicated situation, it can help frame what you're trying to share. And that's an important tool.
What else can we say? All right, if they are, I think you also mentioned, you know, you don't want to give away too much of your tax dollars. So on the. You want to invest it in growth. So in our last minute together or so what would one or two things you would ask our audience or insights tips you would give them for really minimizing their taxes and holding on to their dollars so they can grow.
[00:36:08] Speaker C: So there's an old saying that goes like this prior failure to plan is a plan to fail, right? When it comes to taxes, the thing to do whether you're a high income, W2 earner or a business owner. Get with a tax planner, not a tax preparer. Tax preparers are historians. You want a planner, somebody's going to look ahead to the end of the year and figure out what tax strategies will work for you. Once 1231 comes, most of the tax savings opportunities are gone, although there are some that I know about that we can implement. But that's the big one is planning. And number two is keep your records, your financial records up to date so that you have an idea of where you're headed. Those two things can save you a mint.
[00:36:51] Speaker B: Right. And you know, even coming to you before the end of the year. Right. You can't change things once the year is over.
So one thing would be you may owe taxes, but by at least working with your accountant in advance, you won't find a shock when you suddenly need to hold onto your cash to pay some taxes because I mean, it's a good thing to be making a profit. And yes, there are going to be taxes that go with it, but you don't want to be losing money. So there's a good thing there too.
How can people find out more about you, your, your firm if they want to reach out to you?
[00:37:29] Speaker C: Really see raiseaccounting.com and how do you.
[00:37:33] Speaker B: Spell Rays Accounting R E Y E.
[00:37:36] Speaker C: S as in San accounting.com and we're just outside of Philadelphia but we have clients around the country and we even have one or two international clients so we're real easy to get a hold of and I'm watching my emails and phone calls constantly. So we are working on building a large clientele.
[00:37:58] Speaker B: Thank you so much for your time today and sharing your ideas with our audience. I'm going to check out raceaccounting.com myself and I know we have some synergies together so it's really share advice together.
[00:38:12] Speaker C: It was a pleasure.
[00:38:13] Speaker B: Thank you.
[00:38:14] Speaker C: All right, take care.
[00:38:23] Speaker A: Of Sam.
[00:39:02] Speaker B: Welcome to another episode of Balancing Acts. I'm your host Linda Hamilton and this is a show we want to be your guide to grow profit and scale. I'm a cpa, a certified exit planning advisor and a systemologist.
We know that the numbers matter in your business in building a profitable, resilient business. But the story behind your numbers matters even more. Today I'm going to wear my exit planning advisory hat and we have a great guest with us, Cliff Gardner, the founder and co founder of ECP Ventures. And we're going to talk about what does it mean to sell your business?
How do you get ready the Real problem I see as I talk to business owners across the country is they'll often say they're not ready to exit, you know, because it's kind of scary, confusing, we're not ready. But suddenly when they're ready, they think they can maybe sell within a year. The problem that I see is they're not ready to give up control because they don't know what comes next. And even more their identity is to so wrapped up in their business. Welcome Cliff, I'm so glad you bring your expertise in so many years representing both sellers and buyers in getting a good price.
So can you start us with what are some of the steps a business owner goes through when they start to think about selling?
[00:40:28] Speaker D: Well, you're absolutely correct, Linda. A lot of business owners are not prepared. They're actually the own victim of their lack of preparedness.
Many times a business owner is not ready to sell until they're suddenly thrust into it. All of a sudden they encounter bad health or age or sheer exhaustion. I see a lot of my clients have sheer exhaustion and just are ready to depart.
But they didn't do any succession planning whatsoever. They didn't do any tax planning, any legal planning. And all of a sudden they have this huge urgency to sell.
But it is possible to be to conduct a transaction on their behalf and do it well. They just need really good representation. They need really good guidance through the process.
We as a firm, we recommend a 10 step process for going through the transaction. The first step is to make a definitive decision to sell. It's a very emotional decision. The business owner should decide if they have exhausted all avenues as far as transitioning to family members, next generation employees, ESOPs, there's a lot of options there. But if they want to go in the open market and do an open market offering, then they could make a good decision to sell. Then they need to really clearly define their objectives. And their objectives are both quantitative and qualitative. I'm a longtime Fortune 500 person, but I was really surprised to see a lot of our owners don't take the highest price because they're focused on qualitative aspects. How are their employees going to be taken care of, Their patients, their vendors, their legacy? So they really need to understand what their objectives are. Then they need to get really good representation.
And we recommend that they get an M and A advisor as opposed to a business broker. There's a huge difference. If the owner wants to retain control, the difference is an M and A advisor advises. They're high end technical professionals that Give guidance, direction and provide leadership throughout an offering. A business broker treats a business as a commodity and they take it in the market as a commodity. They don't get deeply involved with it and they sell it as a commodity. So a business owner is much better off if they have a true fiduciary and a trusted advisor to lead them through the process.
Then they should establish a minimum price. The market is very volatile, very fluid and you can't be certain what the final price will be. But the seller and the representative should have an agreement on what the minimum price should be before they start an offering. Then.
[00:43:02] Speaker B: So much, you're sharing so much wisdom here. Let me tack and move back a little bit on those first four steps.
I particularly like what you talked about. You know, the M and a advisor needing an advisor.
What, what are some of the issues when, when a business owner, let's say they are worried about their employees. I work with a lot of business owners. I will tell you how often it comes up that they're concerned about selling or their transaction might fail because they're as much concerned about their employees and what's going to happen to them. Will the culture be the same? How do you work with someone when that is their concern and they come to you?
[00:43:46] Speaker D: We work with a lot of high quality clients that have that very concern and the best thing we feel we can do for them is first, understand their objectives. But second, we strive to get every one of our clients at least five qualified. Lois. Five qualified offers so that they have choices in the marketplace so they can do their qualitative evaluation and really get a sense for the culture of the company taking over. Some are harsh PE guys that are going to be all numerically driven and not care at all about their employees.
Well, they radiate that the buyer sellers pick up on that very easily. We, we, we requested our sellers spend a lot of quality time with the buyers and really understand their culture. Work through those issues so they know what to expect for their employees. We also spend a lot of time on post transaction relationships, structuring employment contracts, retention agreements and making sure that the high quality employee is going to be well taken of care care of. On the other side, do you think.
[00:44:47] Speaker B: That most of the when you're talking about employees in these contracts, do the employees know they're thinking about selling or is this something they have to do more discreetly because they're worried about the transaction? Let's say they don't have any contracts.
[00:45:03] Speaker D: In place under our transactions. The employees never know until the last seven days.
There's a circle of confidentiality. Everything is privately negotiated. Obviously, if it's very important to our clients, we're representing those employees de facto through the entire process to structure a relationship and a retention process for them on the other side. But you have to keep the circle confidentiality very tight. The key people that are going to go across there may be, say if the owner is stepping out, there might be four people in, in senior management, those four will know. And usually we'll have employment contracts, retention agreements, stay bonuses, all those types of things put in place before the transaction consummates.
[00:45:48] Speaker B: So in your process, I noticed that it is. It takes a period of time in your 10 steps. So when people come to you, some of these things, they're not done yet. Right. They might not have contracts in place. Is that when you do, you help them through that process of getting things together so that they are prepared for that sale?
[00:46:09] Speaker D: Oh, absolutely. It's one of the benefits of our firm is both my partner and I were longtime CPAs, tremendous amount of experience in the Fortune 500 setting. He's a PE guy. And so we are a champion for our clients all the way through. We bring the financial acuity that's necessary if they're lacking that in a lot of transactions. It's surprising that we've actually spent more time on the post transaction relationships than we have on actually negotiating and structuring the primary deal. Because the post transaction relationships are so critical to our clients. They want to know their employees are taken care of. Fortunately, the marketplace has really changed since COVID and the buyers are much more respectful of employees than I had ever seen in my career before these last two years.
[00:46:58] Speaker B: One of the other things I really wanted to talk about is there's a lot of overwhelm right in getting ready to sell. And many business owners who first come to me because I work in more of a coaching role. So I kind of want to do reverse due diligence. I call it looking at finding the gaps so that they can have some time to improve. Because many times I joke that when I talk with my audience about using the word exit, it's like they get hives. They don't want to talk about exiting at all. And then suddenly, okay, I want to sell tomorrow, I want to sell in three months. And they haven't done any of the preparation work.
So when they come to you, have they already done that? Do you ever have to get them maybe more prepared or send them back to the drawing board so that they can get a price because often that price that they think they'll get is not necessarily the true value.
[00:47:54] Speaker D: But we work in the space between 5 million of revenues and 50 million. And I would tell you that my clients never come prepared. I can't tell you that I've had a single one that showed up and said here's three years of historical financials. I'm ready for a Q of E. We are spotless and ready to go. No, that's not the case whatsoever. We end up we. First of all, as a firm, we will only take clients that we feel we have a 90% probability of having a successful offering and closing. Closing. That's critical to us. We'll only take clients that we can take to market with pride, dignity and confidence.
Once we. I tell our clients all the time, if you can convince me that you've got value, then that's your toughest hurdle. Once you've convinced me, I won't have a trouble convincing the open marketplace. But we've got a lot of work to do to clean up your financials. Not only do you have to clean up the financials so they're fairly and appropriately stated, but most clients have been trained wrong. Not wrong in general, but wrong for an offering because they've been trained if they have an extra hundred thousand of expenses, they save 30,000 in taxes and they think that's great.
Now when they go to sell, if they sell for six times earnings, that extra hundred thousand of expenses cost them 600,000 of purchase price.
We go through and scrub their financials top to bottom for the three years historically that we're reporting. And we find what, what's called seller adjustments, seller add backs. And everybody always thinks it's just adding back personal expenses, but it's not. It's personal expenses, one time expenses, redundant expenses, subjective expenses. The buyers are used to this exercise where we go through and we will, we will improve earnings, typically anywhere from 10 to 50% depending on depending on the status of the individual's clients. But you want to the buyers. Here's the most salient point I could make. A buyer may ask 500 questions, but they only want one answer. And the answer they want is what is this company worth to me the day after I buy it? Is there transferable value and what can I anticipate the day after closing? So they want financials that represent the true earnings and the true financial performance of the company.
[00:50:12] Speaker B: That is very powerful advice. We're coming near the end of our time together.
What would you say if Someone's thinking about selling in 2025 and they want more information about you or how to get started. What would you recommend and how can they get in touch with you?
[00:50:28] Speaker D: Well, we certainly recommend that they visit our website. It's ecpventures.com and I would ask them to take a look at the process tab. We have a process tab where we believe we can sell any high quality company within 150 days. And we've got a very disciplined 10 stage process where every day of those 150 days is utilized. And one thing that I'd like to share real quickly is we are a success fee firm. That means we truly partner, collaborate with our clients. No upfront fees, no minimum fees, no guaranteed fees. We put the skin in the game. If we believe in you and you believe in us, we work as a tandem to take your company to market and strive to do a successful offering.
[00:51:14] Speaker B: Thank you so much Cliff for sharing your expertise with us. My takeaways today are that you don't want to do this alone. You don't need to be overwhelmed with the process or even with finding a buyer. I would check out and I will as well, ECP Ventures so that I can understand more about the best way, especially 150 days of taking your company to market. I hope you'll stay with us next week. Come back soon for another episode of Balancing Acts. Thank you again.
[00:51:53] Speaker A: Sam.
