Speaking and Communicating Podcast

Welcome back to the Speaking and Communicating Podcast.

I am your host Roberta.

If you are looking to improve your communication skills, both professionally and personally, and overall improve yourself, this is the podcast you should be tuning into.

Please remember to subscribe, give a rating and a review.

Today, I am joined by Michelle Seiler Tucker.

She buys, fixes, grows and sells companies.

She's the author of the best-selling book Exit Rich, and she's here to talk about some of the things you might not have heard before, but definitely that you need.

Before I go any further, please help me welcome Michelle.

Hello.

Thanks for having me on.

Thank you for being here, Michelle.

I'm excited because I think besides the listeners, just me alone, I'm going to learn a lot from you today.

Tell us a little bit about your background.

I've always been an entrepreneur, even as a little girl.

I never played with toys.

I was never a little girl that played with toys or dolls.

I would walk around with a notebook and a pen, and I would walk up to perfect strangers at grocery stores.

I was definitely the danger stranger kid because I would walk up to every stranger.

You're not supposed to talk to strangers.

Of course.

I would walk up to him at church and school.

I would always walk up and say, Hi, my name's Michelle.

What's your name?

What do you do?

How'd you get started?

I was always interested in how people started their companies.

We're selling a $55 million company right now, and have 350 employees.

The owner of the business started the business on an 8th grade education out of his pickup truck, and now they're doing $70 million in sales and about $10 million in EBITDA, which is earnings before interest, taxes depreciation, amortization.

I love the stories.

I was always curious as a little girl.

And I always say, you know, you really know you're an entrepreneur when you're curious about everything.

And so I own different businesses.

I did go to work at Xerox as a high volume specialist, and I got promoted within six months to work as regional vice president over 150 salespeople.

And I did that for a year, year and a half until I hated it.

I didn't like working for corporate America, especially a Fortune 500 company, because they're not really accomplishing anything.

And so I ended up leaving Xerox, I transitioned in franchise sales, franchise development, franchise consulting, where I would help franchisees get their business on the map and open hundreds upon hundreds of locations.

So I did that.

And then I ended up transitioning into mergers.

We still do franchising, but I ended up transitioning into mergers and acquisitions where you specialize in buying, selling, fixing, growing companies.

We've sold hundreds and hundreds of businesses pretty much in every vertical you can imagine.

I'm a mergers and acquisitions master in intermediary, a senior business analyst, and a bunch of other titles that doesn't really matter.

And so, and I own different companies in different verticals.

So I'm an entrepreneur, true and true, through and through.

How long have you been running your own businesses?

Well, I've been running my M&A firm about 22 years.

And so the franchise has developed my company.

I ran that for probably two or three years before transitioning.

And then I've got other companies, I have medical clinics.

I've had those and a medical marketing company since 2000.

A graphics company specializes in first responders and I've had that since 2015.

And I'm always applying companies, but I also build them to sell them.

You said you train a lot of businesses when they get started to think about exiting already.

Yeah.

Why is that important?

So Steve Forbes endorsed Exit Rich.

Everybody knows who Steve Forbes is, right?

Steve Forbes says 80% of businesses on the market will never sell.

80%.

M&A Source says 90% will never sell.

So that means you have an 80 to 90% chance of failure before you even start.

You have a 10 to 20% chance of success to actually sell your company and exit rich.

Most businesses exit poor, they sell for pennies on the dollar, they close their company, or even worse, they file a bankruptcy.

And so it's so important to really think about your business, think about what your objectives are.

And like Stephen Covey says, start with the end in mind.

You should plan your exit when you're beginning.

And I know it sounds so counterintuitive and counterproductive, but if you start with the exit in mind, when you start a business or build a business, you're going to build a much better business, sustainable, that can run without you, that you can scale internationally, and that you will actually have a sellable asset when you're ready.

The reason why so many businesses don't sell is because business owners don't think about selling until a catastrophic event occurs, internal or external, internal or health issues, partner disputes, death, divorce.

We have 51% divorce rate in our country.

And external is this pandemic we've been in for the last year.

So business owners will call me up, and they'll say, Hey, I can't take any more, I have to sell my business.

Or I was just diagnosed with cancer, or I'm just getting a divorce.

And I always ask them, let me take your temperature.

What are you wanting for your business?

How much do you want to sell it for?

Because I want to see how realistic they are.

And most owners are never realistic.

They'll say, Oh, I want $10 million, but they're making maybe 100,000 a year.

And they're never going to get anywhere close to $10 million.

So I always ask my clients, how do you come up with that figure?

And the answer is pretty much all the same.

It's what they need to enter the next phase of their life.

It's what they need to buy another business.

It's what they need to start a business, retire, put five girls through college and pay for five girls' weddings.

It's always about what they need, not what the business is worth and not what the business is valued at.

So buyers don't care about what you need.

Buyers care about what the value brings to them and how much you're willing to pay for it.

So that's why I say you really should start what I call the GPS exit model from day one.

And it's really simple.

Roberta, if you want to drive somewhere in Chicago, and I've been to Chicago many times, but I don't drive there because I feel like it's complicated.

I use the CTA as well.

If you want to drive somewhere in Chicago, you pull out your phone, you go to Google Maps and what's that or Wave or one of those apps, what's the first thing you plug in?

The address.

What happens if you don't plug in an address?

You won't know where to go.

That's what happens to business owners.

You just made my point.

You call it address, I call it destination.

Business owners don't plan to fail, they fail to plan.

So it's very important to know what is your destination.

This is your number.

This is your end game.

Everybody gets hung up on the end game on their number.

Just say, look, I want to sell my business.

When I partner with business owners, I look at their business really, really, really thoroughly.

I do my due diligence and I look to see, can I sell this business for anywhere from $10 to $20 million in the next three to five years?

And if the answer is no, I don't partner.

It's not worth it for you.

It's not worth it for me.

So you need to look at your business and say, okay, I want to sell this business for, let's say you want to sell it for $10 million.

That's the first start.

You can change your number along the way.

It's not written in stone.

The next thing the GPS exit means is where are you starting from?

What is your current location?

And in business, this means what is your business value today?

If you just started a business, it's tough to value that, unless you're like a SaaS company or something like that, and you have a bunch of proprietary assets, like you have software and app bases and stuff like that.

What do you want to sell it for?

So let's say you want to sell it for $10 million.

Let's say it's currently worth $5 million.

And you should meet your business evaluated every year, because there are events to increase valuation and there are events to decrease valuation.

This pandemic is a perfect example of that.

A lot of businesses took a huge nosedive and went out of business, especially in the hospitality industry, and a lot of other industries went through the roof.

They have the best two years they've ever had in their entire time of being in business.

So you always need to get your business evaluated.

So let's say you want to sell for $10 million, it's probably worth $2 million.

Time frame, when do you want to do this?

Let's say you want to do this in 10 years.

Now you have a start of a plan.

That's what this is, the plan.

They need to know, well, who are my buyers going to be?

There's five different types of buyers.

There's first-time buyers.

95% of buyers are first-time buyers.

They don't buy $10 million tokens.

Then you have turnaround specialists.

They buy distressed assets with little to no money down.

Then you have private equity groups.

They buy based on platforms and add-ons.

So if they want to get into the electrical space, they're going to look at platforms between $3 million to $7 million in EBITDA.

Again, EBITDA is earnings before interest, taxes, depreciation, and amortization.

If they already are in the electrical space, then they'll look at add-ons.

So they'll look at businesses under $1 million for an add-on.

Then your fourth type of buyer is competitors slash strategics.

These buyers are typically your best buyer because they're buying synergies, they're not just looking at your numbers.

Plus, you have contracts in place, you have databases, you have a patent, you have trademark, copyright, trade secrets.

Fifth type of buyer is what I call storm chasers because they chase EBITDA.

They're interstingnostic and they're more EBITDA-specific.

Then if you want to sell for $10 million, you need to ask yourself, well, what's my numbers going to look like?

If I'm wanting to sell a $10 million business, where does my revenues need to land?

My cost, my operating expenses, most important, your EBITDA should be around $2 million if you want to sell it for $10 million.

Then you need to ask yourself, what are the synergies the buyers are looking for?

What will make them pay more?

Because when we sell companies, we bring multiple buyers to the table creating a bidding war.

That's how you maximize value is through a bidding war.

So then you have to ask yourself, okay, now I know my numbers, what's my synergies I have to build in which to maximize value?

This is really growing your business on the six P's.

And that's what you have to do next is look at each one of the P's.

It's really identifying that 10 million and reverse engineering your plan.

Then you have to determine what your why.

Because if it was easy to sell a 10 million dollar business, wouldn't everybody be doing it?

Everybody.

There's a lot of work that goes into it.

And you need to start planning from the beginning.

Because otherwise, think about this, you're 10 years into your business and you still don't have the right people and the right seats in your company.

You're still doing everything.

You don't have a solid management team in place.

You're in an industry that's okay, but it's not thriving.

Your processes are still a mess.

They're inefficient and cause loss of products and probability.

And your proprietor is not all buttoned up, so you're being sued because you didn't get a federal trademark on your company name.

That's what will happen to business owners if they don't do what I'm telling them to do right now.

And that's why we have the Road to Exit Rich program, in which we help these businesses get ready to exit a business in one to five years.

Right.

The one thing that's a challenge when you start a business is the emotional attachment.

So you're not going to think about the exit strategy because you are already attached to this baby that you just gave birth to and you're trying to grow.

Like you said, it's hard to let go of responsibilities and delegating.

And therefore, that is why I think it would be a little hard to listen to somebody like you at those beginning stages.

Yeah, but they should because otherwise they can listen to all the business owners and cloud bank clubs and all the businesses that close their businesses and all the ones that sell for pennies on the dollar.

That's why you should get my book Exit Rich and read it now because the price that you pay now to do it the right way will be far less significant than going back and trying to unring the bell for all the mistakes you made.

Right.

And sometimes some companies right at the beginning, they grow too fast.

Like I had a podcast client whose client he's in software engineering.

So he had a startup within a very short space of time.

It went from just being him and the two guys that started with to 100 employees.

They did not even know what those beginning stages, they needed those people, but they did not even know how to have the company hierarchy, the structure, who to put in place in order to be more efficient.

Do you think during that time, he would be of the mindset of, let me think about Exit?

No, it's not so much the mindset of, let me think about Exit.

It's the mindset of, let me build the business because sustainable, scalable, so when I'm ready, when the day happens, I actually have a sellable asset.

I'll give you a perfect example.

I have a lady whose husband dropped out from a heart attack at age 40.

Very young.

She was in her early 30s, left her with a mountain of paperwork, a mountain of debt.

She had no idea about the debt.

She had no idea about the finances of her company business.

She brought me in and said, can you sell a business?

I started asking questions.

How many employees do you have?

Are there any processes?

Well, he had a commercial contracting business, residential commercial contracting business, but he had no employees.

He had all subcontractors.

When he died, the business died.

That's what I'm trying to get business owners to avoid.

It is about planning that sellable business.

So you have a good, big, huge, mass dig in the future versus doing it the way that everybody already does it.

Work, work, work, work, work in your business, not on your business.

All of a sudden you wake up one day and go, I got to sell my business because diagnosed with cancer, I'm getting divorced or whatever.

And then your business is nowhere near what you need.

So if you did all the steps in the beginning, when you have to sell, now you've got a sellable business and you won't have the stress of the world on your shoulders.

Yeah, solopreneurship, instead of being an entrepreneur and having employees, it seems to be a growing trend because everybody wants to open a business and they work for themselves.

It's not sellable.

The only time that that's ever sellable is if you have an e-commerce business and you're selling on Shopify and Amazon.

There's lots of buyers out there that will buy up businesses that sell Amazon and Shopify.

So there's a market there for that, but you'll never maximize value because they're paying you pennies on a dollar.

They're not paying you any fair price whatsoever.

I had somebody approach me the other day that says, look, we're getting all these offers from Shopify and Amazon.

They offered me $3 million.

And I said, well, first of all, you can never...

They offered $1 million.

She wants $3 million.

And I said, no, no, no.

We build this up a little bit more.

I can get you probably $6 million.

I can get you double.

What I'm educating right now is something every entrepreneur and their management team should pay attention to.

And management teams might say, oh my gosh, why would I help my own herself?

Well, because great owners take care of their people who help get them there and they compensate them.

And a lot of times buyers come in and they'll promote from within and they might give them some equity.

So that's why you should help your owner build a sustainable, scalable, sellable business.

And is to think beyond themselves.

Yeah, CFOs, CEOs, CTOs, CMOs, presidents, vice presidents, directors should read Exit Rich.

Everybody has a job.

It shouldn't be thought of or looked at as a job.

It should be thought of as your business inside that business.

You're part of the team, but what is your business?

What is your core competency?

Is it financials and you're the CFO?

Right.

You really have your own business inside that business, helping the team to grow, because if the company grows, everybody wins.

Yes, definitely.

And employees need to stop thinking of their job as a job.

That's a huge shift.

Huge shift.

And business owners have to stop thinking of their company as a baby.

Your baby's at home, all homes love them, hug them, kiss them.

I mean, we go ahead to business for ourselves, so we can spend more time with our children.

We have a better quality of life and financial freedom.

I talked to a business owner the other day, been in business 15 years.

Hasn't seen him on vacation in nine years.

Missed all of his kids' games, everything.

As a female entrepreneur who owns many businesses, I make it a priority never to miss my daughter's games, plays, gymnastics meets.

She's in everything, but I never miss any of it.

And also, that's my first day of school because I plan my business and entrepreneurship around her, not having her around it.

The former example you have given, that's more common, where the business just takes all of your time.

And most people think in order for it to succeed and grow, I have to just literally move my bed to my office.

I mean, this is why businesses are sellable.

Because business owners have this warped sense of reality that they actually create their business, when indeed all they really created was a job for themselves that they go to work at every day versus a business actually working for them.

So if you want a business, create a business.

Otherwise, you get a job.

Let's talk about the 6Ps and how they can incorporate that into creating, like you said, a business, not a job for themselves.

If you have a management team listening, if you've got employees listening, it's really important for the entire team to buy into this.

Because if the team doesn't buy into this, none of it will happen.

Because the first P is people.

You don't grow a business, you grow people, and people grow the business.

Zig Ziglar said that.

If you don't have any people, you don't have a business, you have a glorified job.

Now that might sound harsh, but it's true, and you have nothing to sell.

And if something happens to you, then who's going to run your business?

Just like the example you gave earlier, yes.

So people's number one.

The employees that listen to your podcast, the team members, the managers, I want all of y'all to hear this.

More than the number one ingredient in the company.

You know, let's think about baking a cake.

You got to have all these ingredients, right?

You have the 6Ps.

It's like baking a cake.

You got to have the sugar, you got to have the fire, you got to have the butter.

So in the business, it's the same thing as baking a cake.

You have to have the right ingredients.

Number one ingredient is people.

Without people, you have no business.

Business owners have to stop working in their business and start working on their business.

Business owners have to really take inventory.

What are your strengths?

What are your weaknesses?

Identify your strengths, hire your weaknesses.

Most entrepreneurs are visionaries.

They need that COO.

They need that CTO, that CMO.

They need the CFO.

They need people in their organization because they're visionaries.

They're not integrators.

They're not good at running a company.

They're big dreamers and big visionaries like a Steve Jobs.

Yes.

They can't do the day to day.

Don't be afraid to hire people smarter than you.

Ask yourself, how many seats do you have in your company?

Make sure you have the right people and the right seats.

Seats means who's in accounting, who's in legal.

I also say ask the who question.

Who opens the doors?

Who services clients?

Who answers the phones?

Who takes messages?

Who sends emails?

Who handles manufacturing, distribution, quality control?

The list goes on and on and on.

The clue is you should never be next to the who.

Because you want the business to run without you.

Richard Branson said he's rich because he hires people smarter than him.

Thousand percent.

And same thing with Donald Trump.

Whether you hate him or like him.

Every deal with Donald.

He's an example of a huge visionary.

Yes.

But he's not the day to day.

He's not the detail person.

So every leader has to have smart.

They have to surround themselves with people smarter than them.

And it's okay.

Because at first you're going to be like, Oh, my God, losing control.

Well, here's the bottom line.

You will never grow unless you let go of the control.

Yeah, that's hard for most entrepreneurs.

You got to get over it.

You got to get comfortable being uncomfortable.

Otherwise, we'll get yourself a job.

Essentially.

Yeah, it's hard to get a job.

Think of it as a business and you're trying to move up the ladder.

So let's say that you're in marketing, if you're a marketing person working for a company, that's your marketing business in the company.

What is your objectives and your goals as that employee, as that team member?

Because remember, they can't do it without you having your business marketing.

What are you doing to explode the company?

Succession plan.

A lot of people don't think, let me train one of my subordinates to take over from me if I get promoted or if I'm a business owner.

A lot of them don't think about the succession plan.

So if you think of the marketing department as your marketing business, isn't one of the things you should have as a succession plan and have someone that you're mentoring to take over from you one day?

Yeah, a thousand percent, because otherwise, if you don't, you won't be promoted.

You'll do so good, you're going to stay in that spot forever.

And then the second P is product.

Product is your product, your service, your industry.

So you have to look at your product, your service, your industry, and ask yourself, are you on the way up?

Are you in Amazon?

If you're on your way up and you're in Amazon, then you need to sell when you're in your prime.

Are you a blockbuster and you're about to go out of business?

You never want to sell when you're about to go out of business and that's when 80% of business owners decide to sell.

And that's why 80% of businesses never sell.

So when I say plan your exit from the beginning, I mean it.

Plan your exit from the beginning.

Go exit rich.

Isn't that what we all want?

Exactly, but nobody is doing it.

Very few people are doing it.

So plan your exit from the beginning, but you also in business want to have three to five puppet centers, ways you get paid.

One of the reasons why restaurants took such a huge nose dive, hundreds of thousands of restaurants went out of business.

Yeah, during the pandemic.

The reason for that is because they have one puppet center, one way to get paid.

That's it.

You got the bar business, restaurant business, that's it.

Where's their e-commerce business?

Where's their specialized products?

They have nothing else that they're selling.

That's an issue.

Smart restaurant owners like Emma Legassi, who owns Emeralds, he has a whole store dedicated to cookbooks and glassware and all kinds of stuff associated with cooking.

They do cooking classes.

He sells private Emeralds food and different type of ingredients and things like that.

Commander's Palace, which is one of the biggest number one world restaurants, I think it's a Michelin restaurant here in New Orleans, they do wine and cheese tastings on Zoom all around the world.

They sell stuff.

So you really got to have three to five different profit centers.

That's what I have in all of my companies.

So if one goes belly up, you got another one.

It's like COVID.

If these restaurant owners, you know, people are cooking a lot at home, if they have their own cookbook, if they have their own e-commerce business, whatever, so in aprons, if they were doing cooking classes online, and wine pairing, cheese classes, teaching kids how to cook.

So many ways, creative ways, they could have come up with and they could have stayed in business during the pandemic.

And they are within their exact same industry.

It's not like they had to learn something different.

It needs to be in your same industry.

I'm glad you brought that point up because I don't want to see a restaurant or go and open up a landscape company.

It's got to be in your same industry.

It's like for us, we make money when companies sell, we get paid on evaluations.

We have a Road to Exit Rich program.

I get paper speaking.

We have four profit centers and we sell books, top five, just in this one business.

But I have other businesses too.

For me, it's congruent because my specialty is business, so that's another part of the industry it's in.

It's very important to make sure you have those three to five profit centers.

And then the next P is processes, and this is where almost every single business owner fails because they don't have their processes flattened up.

You need to process this policy procedure manuals, SOP checklists, standard operating procedures.

They need to be online.

They need to be printed.

They need to be on hard copy.

They need to be rented for training purposes, for quality insurance, for even recommending they need to be in place.

Most business owners don't do this.

The other thing is a lot of business owners design their processes around the owner's agenda and what the owner wants.

Our big example of doctor's offices.

When are they open?

When we all work.

When can we go to the doctor's office?

When we take off.

You know, my husband and I are medical clinics, and we asked our patients, we said, what are the top three things that are most important to you?

And they said flexible hours.

We can't come in from nine to five.

So we're open three days a week until 730 at night.

And they said Saturdays.

So we close half a day on Friday, because most patients don't want to come in on Friday afternoon.

They want to go drink.

And so we give our staff a break and we're open on Saturdays.

And then we said, what else is important to you?

And they said, no wait time, our little wait time.

So we got it down until we had to wait more than five minutes.

That's how organized we are.

And then the other thing, they said, we really want friendly staff, because how many times have you went to doctor's offices and the staff are so freaking rude?

Well, we always assume they're so tired and they have much to deal with.

Really?

They don't work very many hours.

Turns out it's three days a week.

Yes, and they want friendly staff.

We incorporated those three things in our ten medical clinics, and guess what we have?

We have a business the patients want to come to now.

And so, easy peasy.

Ask your clients, what are the top three things that are most important to you?

McDonald's did this back in 1940.

If you want a great movie to watch, go watch a movie called The Founder based upon the McDonald's story.

And Ray Kroc who came in.

Ray Kroc, yes, I saw that, yes.

Back in the 40s, they said, we want to start a fast food restaurant with the fast food processes.

What do we want our customers to experience?

And they asked the customers and they all said, we want great tasting food, this hot, 30 seconds to us.

And that's what you get with McDonald's.

Now the order is usually long.

And so, even when I did that back in 1940, you can eat at McDonald's anywhere in the world and still get the same experience.

So processes are huge.

If you don't create well experiences for your customer, you're going to lose market share because your competitor will be more happy to do it for you.

Just keep that in mind.

Number four is proprietary.

Proprietary is the highest value driver.

These are your proprietary assets.

The more well branded you are, the more I can sell your company for.

As long as your brand is relevant in the mind of the consumer.

Nobody's paying anything for blockbuster.

But guess what they are paying for?

This guy here, Apple.

Apple is the most valuable brand in the world, worth $389 billion just for the brand.

That doesn't include inventory assets or real estate or anything else.

Build your brand, build your business, build your exit.

Trademarks.

Biggest mistake that business owners make is they go get a trademark.

Because they go to GoDaddy and they're like, yes, I got this.com, I'm in business now.

And then they go to Illinois.

I'm going to say Illinois can go to Chicago.

They go to Illinois and I'm in New Orleans, Louisiana.

But they go to Illinois and they set up a trademark.

But they never check the federal database to make sure it's available.

So four or five, six years down the road, they get a system to sys letter from their attorney.

And they have two choices.

Stop using that name, pick another name, start all over again, or spend a lot of money in court finding that.

Doesn't that process go along with actually checking on the federal database, whether your company name that you're coming up with has already been taken or not?

Yep.

But you should take one step further because I did that.

And you should take one step further because databases always show all the different variations.

You should hire an attorney to do it because attorneys have certain software.

They can go on and scrape that much quicker than you can.

Drop a report for you.

And even if it has your name in it, my attorney says, you have to trademark Seiler Tucker.

That's my name.

And they said, are you okay with somebody going out and starting a Tucker M&A firm?

I said, no.

You're okay with somebody starting Seiler Finance because we do finance too?

I said, no.

And he said, that's why.

Because then you're going to be confused with Seiler by dealing with here.

I will get a trademark on my podcast on Exit Rich.

How an attorney have them do the search.

Would you have to get a trademark?

If you're going to do business internationally, go and get a global trademark as well.

And then also products.

If you have any products that are patented and stuff like that, or even if they're not patented, a lot of times a trademark for each patent.

We have a client that has six, seven different products, and each one is exclusive.

One's exclusive to Walmart.

One's exclusive to TJ Maxx.

One's exclusive to Marshalls.

So you need to go get those products patented so nobody can copy you.

I'm sorry.

Trademark, not patent.

Patents are huge.

If you go on a short take, everybody always asks, do you have a patent on that?

So the company for $18 million, it wasn't making much money, but they had 18 patents.

Databases are huge.

Facebook paid $1 billion for WhatsApp, and WhatsApp was hemorrhaging money.

Hemorrhaging, but they had a billion users.

Celebrity endorsements are big.

We have a client that's endorsed by Oprah.

Teachers will pay a lot of money for Oprah.

Everybody wants to get their products in front of the queen.

Of course.

Oprah's the queen of everything.

So radio personalities, digital real estate is huge.

When I talk about digital real estate, I'm talking about you're number one on Amazon in your category, or you're number one on Etsy, or let's say you sell bedsheets and pillowcases, you're number one on Wayfair.

Let's say you have KitKatik or some big radio, TV hosts or celebrities, and they endorse your products.

They can only endorse one vertical at a time.

They can't get up there and endorse 10 different skincare companies, they will lose credibility.

And then you own that digital real estate, so nobody else can bump you from that unless you falsely contract.

People will pay a lot of money for all of this stuff.

The next P is patrons.

Two things I want to say, make sure all your proprietary assets, your patents, your trademarks, everything is in a separate LLC, a separate corporation.

You get sued, you're most likely to lose your IP.

Make sure your contracts are transferable.

Contracts are really valuable.

Vendor contracts, manufacturing contracts, distributor contracts, any type of franchisor with franchisees.

Client contracts are the biggest and most valuable, especially if you have a recurring subscription model, because buyers will pay more for subscription models.

But you got to make sure that your client contracts, all your contracts are transferable.

And I can promise you they're not.

They need that transferability clause that says, the contract is transferable upon a new entity, probably without written permission.

If you can get that in there, but a lot of times they'll fight you on that.

98% of all sales are asset sales, not stock sales.

And so if your contracts are not transferable and they don't agree to do a stock sale, your deal is dead in the water.

Or you have to go to each one of your clients and you have to ask them to sign a consent to transfer to the new owner.

Now you just told all your clients you're selling the company.

Which is why you should really think Exit Rich from the beginning so that all of those things are taken care of.

That's what I'm talking about.

I'm talking about costing your teeths and donning your eyes.

Even if you never sell your business, you're going to have a business that operates in all 6Ps.

You're going to have a business that you can scale, that can run without you, that you can sell when you want to.

If you don't do these things, it's going to cost you a lot of money in the long run and your business will not be sellable.

At 50 is patrons.

Patrons is your customer base.

Most business owners follow the 80-20 rule, right?

80% of your revenue comes from 20% of your clients.

You lose a client or two, you're dead in the water.

You're out of business.

Firestone buying companies are customer concentration.

You want the customer to have a certification.

Also, if you've been in business 10, 15 years, your clients are probably aging out.

So you have to innovate.

I call it A, always innovate and market.

You have to innovate in your products and services to build to new generations.

Millennials, yes.

And Gen Zs.

That's so important.

And the last piece is profits.

And I always say, Roberta, that lack of profits is never the problem.

You're not making money, that's not your problem.

It's the symptom of not operating on the other 5Ps.

The symptom of not having the right people in the right season.

You're doing everything yourself, guess what?

You're going to get behind.

You're going to get backlogged.

I partnered with a company in the graphics industry.

They were stuffing invoices in the cabinet because they didn't have time to bill their customers.

They were stuffing resumes in the drawer because they didn't have time to go through the resumes.

They weren't billing their customers.

They weren't hiring.

All they were doing was printing the art and sticking them into the cars because they had no time for anything else.

If you don't have the right people in the right seats, you're not going to be profitable.

Very basic common sense.

I don't understand why it would be lost on anyone.

Because common sense is not as common as it once was, number one.

And number two, business owners don't think about this stuff.

They don't think about, oh, I really should get a public trademark.

Oh, I need to put that transferability clause in my contract.

It's not what you know that gets you in trouble.

It's what you don't know.

So lack of profits is never your problem.

Go back and look at the 5Ps.

If your processes are not backed up, I can assure you, you won't be profitable.

If you don't have checks and balances, you know, entrepreneurs go one way or the other.

They usually don't control things.

They want to do everything themselves.

And then when they decide to delegate, they just turn it all over and say, here you go, we're going to take it all.

But guess what?

You should always inspect what you expect.

You should always trust what they require.

Three out of five businesses will be embezzled every single year because they turn it over to a CFO, or they turn it over to a bookkeeper, and they don't have checks and balances in place.

I went into a company, they had two companies, one that was doing well and one that was headed in the bankruptcy.

The one headed to bankruptcy, the CPA, the in-house, employed CPA was embezzling money from them.

Yep, happens all the time.

So there's no one more senior who can check periodically?

You can get a senior, you can have a CFO, make sure you have the checks and balances in place, you're checking on the CFO.

Luckily, I've never seen a CFO embezzle money.

It's usually at a house where the wife was embezzling money, the wife was stealing money and the husband never knew.

They both worked in the company?

Yes, the wife was stealing.

I have situations where the business partner is embezzling, and I have situations where the admin person is embezzling.

I've seen the ops person embezzle.

I've never seen a CFO, and I have some CPAs embezzle.

Interesting.

So those are 6Ps, that's the infrastructure.

Every business owner should plan their exit from day one.

When I say plan your exit, that means get your ducks in a row.

Figure out what you want to set your company for.

Always get your business evaluated every year.

Determine who your buyers are going to be.

Know your numbers.

Then start building out your business by building your people first.

Without people, nothing happens.

Without leaders, nothing happens.

Without management, nothing happens.

It's not just you giving yourself a job and calling it a company.

It's not a company, it's a job.

And I can't sell it.

Think about it, it's very decorative.

No employees.

You can't sell that.

Solopreneurs, you gotta build a business or just keep your lifestyle job, which is still good because they are making money for themselves.

They should be in charge of their own hours, taking care of their kids, but they're not dealing with all the other headaches.

And solopreneurs is okay.

Every now and then we can sell one.

We sold an insurance appraisal company and it was only him.

But the reason we were able to sell it is in Louisiana, in order to appraise real estate, you have to work underneath someone.

You have to be their apprentice for two years.

So we could sell his company and he would sell them.

We have sold solo CPAs and solo law firms before, but it's tough.

But you have to make the decision, you know, stay at home long.

If you love your solopreneur company, then that's okay.

We're not saying there's anything wrong with solopreneurs.

You're not going to be able to sell it.

It's going to be very difficult to sell it.

Do you think in circumstances where you are still a solopreneur, but your business is a return customer type of business and you've built a good enough database, that is sellable?

I think it could be sellable, but you never maximize value unless you have the infrastructure with people and processes and proprietary.

You could possibly sell that, yes, we've done it before.

We sold a lady's business, it was just her, but she had CPAs working under her.

Right.

And each CPA had their book of business.

Yeah, so that can be sold.

But if you have contracts, you got to get that transferability clause in there.

Yes.

And you still have to protect your name.

You could build up your brand for 10 years as a sole entrepreneur and then all of a sudden receive a letter and you have to stop using that.

You don't think about how detrimental that is until it happens to you.

I don't think a lot of us do think beyond what we hope is going to be the best case scenario.

Well, that's why you always get the worst case.

But really, Exit Rich sets you up for the best case scenario because we tell you all the stuff so you're not making the mistakes.

And that's why, like Steve Forbes says, everybody should read Exit Rich.

Even if you don't own a business, you should read Exit Rich.

Yes.

Because I think the parallel to life also is, which I've seen a lot, when somebody suddenly dies, they don't have a will.

They just had so many assets and that kind of thing, you're going to have family fights.

You're going to have disputes, especially if he wasn't married and maybe he lives with someone.

First of all, so you don't have a marriage contract.

There's no last will and testament.

Just get your ducks in a row, like you said.

Get your ducks in a row.

Just like, yeah, make sure you have a will as well.

Most people don't have a will.

Your business should be your most valuable possession.

It should be more than what your financial portfolio is worth.

And so you make sure you tend to that.

Make sure you tend to your business.

You're working on it, not in it.

Like I said, unless you're a solo entrepreneur, like there's a lot of women that work for Mary Kay, for Thrive, that's all okay.

Check to see if you can ever sell your down line, if you ever want to.

That's all I'm talking about here.

So Exit Rich with Michelle Seiler Tucker.

Thank you so much for teaching us basically everything regarding being an entrepreneur and all the T's you should cross and the I's you should dot because there's a lot that happens where nobody pays attention to this or they don't think it's important.

Or like I said, there's just this emotional attachment to my business.

I don't even want to think about not being in it one day, which does happen.

And employees should think about the company as well as the job.

Employees should think of the company as their business and are contributing to their business.

I mean, there are owners out there that do give equity, that do do pocket sharing, that do base bonuses on pocket sharing for a department.

So really become part of the company.

See what suggestions you can make.

See how you can improve the company.

Because when it comes to the 6Ps, profits are not going to be realized unless the other 5Ps are in place.

Yes, I mean, you might have some profits, you might get lucky, but you'll never maximize profits and your profits won't be sustainable unless you operate on the other 5Ps.

Thank you so much, Michelle, for being here.

And before you go, first tell us where to find the book and your social media handles.

Sure.

You can find me at STI, STI at 360.com.

That stands for Seiler Tucker Incorporated.

All of my websites are there.

If you want to go take the 6P quiz, you can go to Seiler Tucker Academy.

Everything's under STI 360.

My main website is seilertucker.com.

We also have our own podcast called Exit Rich.

So tune in to Exit Rich.

You'll hear about million, billion dollar excerpts.

Also, we have a lot of advice on Exit Rich Podcast on what you should do, what you shouldn't do.

In addition to that, you can find the Exit Rich book.

What do you prefer?

Do you prefer to read?

You prefer to read?

We're 99 Hudson stores in all major airports.

You can go to Amazon and buy it.

You can also go to exitrichbook.com and get it.

If you want to listen to Audible, it's out.

I think it's like $4 for the Audible version.

And you can get that on Amazon.

You can get that at Apple or wherever you buy your favorite Audible books.

And then connect with me.

So that's sti360.com.

sti360.com.

You can get the book Exit Rich on Amazon, Audible.

Thank you so much again, Michelle.

Really appreciate you for your time.

Thank you for having me, Roberta.

It's been a pleasure.