Catch Marvin Storm on the #PirateBroadcast™
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Introduction: [00:00:00] Welcome to the #PirateBroadcast™, where we interview #interestingpeople doing #interestingthings. Where you can expand your connections, your community, #kindnessiscool and #smilesarefree. Let’s get this party
Russ Johns: [00:00:10] Good day. Good morning. Good evening. Wherever you happen to be in the world. I thank you so much for being here with the #PirateBroadcast today. We have Martin. Martin's a new pirate in the room. Good morning.
Marvin Storm: [00:00:23] How are you doing? It's Marvin.
Russ Johns: [00:00:25] Marvin. I'm so sorry.
Marvin Storm: [00:00:27] People call me all sorts of things, but Marvin, today
Russ Johns: [00:00:31] I get called John all the time. It's yeah. Okay. I'll believe that. And so thank you so much for being here today. I really appreciate the opportunity to talk to somebody that is talking about exit strategies, which a lot of entrepreneurs may not necessarily think about as they're going into the excitement of creating a business, but it's absolutely important. And I know that you're also a podcaster, so I'd love to talk about that and some of the shows that you have going on with the Exit Strategies podcast, and really about how does somebody think about the process of an exit strategy? What needs to be in place, what needs to be processed and what needs to be thought through as you build a business? Because it's one of those things that I like to think about.
Marvin Storm: [00:01:19] I think every business out there is going to sell or close or something is going to happen at some point in time. There are no businesses other than corporations that are publicly traded or family operations that are passed on to the next generation. But for most entrepreneurs, there's going to come a time when they will exit their business in one fashion or another. If you are able to control that exit, the outcome is generally a lot better. The problem always is that entrepreneurs are so busy building a business. They have their nose to the grindstone. They're in the trenches. They're putting out fires, they're scaling and growing their business on a day-to-day basis. There's just not enough time often to just lift up your head and look around and try to look around the corner and see what's coming down the pike. Unfortunately, sometimes unexpected things happen and nothing has been done and so nothing is teed up. And the employees or the family or someone is thrown in the position of having to make decisions that they're totally unequipped to make. And sometimes a lifetime and if not a lifetime, at least decades of hard work evaporate into thin air.
Russ Johns: [00:02:38] I've seen so many business owners essentially retire and the business just goes away. And to me it seems like a tragedy because it's a viable business. It's survived. It has survived the startup stage. And I would think that they would want to hand it off and continue the business. And a lot of times that doesn't happen. So what's one of the major causes that creates that exit strategy and business closure?
Marvin Storm: [00:03:04] I think it's just as you said a lot of these businesses, in fact, the statistics will show that, 80 plus percent of businesses that are listed for sale, never sell and it should never be that way. It should be, 80% of businesses that are listed actually sell. But if that is not what the actual statistics are, and there's no big mystery to it. The main reason is that people just don't think about it. They don't prepare for it. It's no different than if you were in high school and you didn't prepare for college, comes time to submit your applications to go to college, you may not get to go where you want it to go. But if you work hard at it and you focus on it and you put the right things in sequential order to tee the business up or, get it ready. When the time does arrive, that transition can be successful. It can be smooth. Because there's really only four things that can happen to a business when you actually sit down and think about it. One, it could run forever. You could live forever I guess, but not likely. There's only one person that would ever be able to pull that off and, live beyond the grave, but you pass it on to a partner, maybe pass it on to a family member, sell it to your employees or you sell it to a third party. There are not a lot of choices. It's going to be one of those. And if that's the case, then you should probably think about which one is going to be and how that's going to happen. And then actually start moving forward and setting a plan to make that a reality instead of just rolling the dice. And that's what happened so many times. I have this podcast called Business Exit Stories and I interview business intermediaries, which means business brokers, M and A specialists, transaction attorneys, wealth managers, CPAs that are involved in that transition and they share their worst stories, the good, bad, and some of the really ugly stories of what happens when a business doesn't get sold or it isn't teed up, or the unexpected happens. And how, as I said before, decades of hard work just disappear. And they also share success stories where the business has grown and the right things have been done and they hit the ball over the fence. And it's just gratifying to hear those stories and heart wrenching and really sad to hear the stories that don't turn out so well, especially when it has such a dramatic impact on the entrepreneur or the family and the employees.
Russ Johns: [00:05:39] Yeah. I could see entrepreneurs impact a lot of people. No, you can't argue that a lot of businesses, a lot of families and a lot of communities are impacted by successful entrepreneurs. And also at the same time, not having a business continue on as an equally an opposite impact on the community and the employees. And so for myself, I'm thinking, what is it that creates the value that somebody wants to purchase, because sometimes it's the list of clients. Sometimes it's the, just the systems that you purchased, like with franchising, a lot of people franchise and there's different components to running a good business and having an exit strategy and having, some of those pieces of the puzzle in place. So I always think about systems. If I had a good system and I could teach somebody how to run this business, it would be easier for me to hand it off to someone that could continue to run it. Are some other things that I'm missing out on?
Marvin Storm: [00:06:46] No, I think you hit the nail on the head. There's components. It depends on who the buyer is, what they're interested in. But as a general rule I'm in the process of writing a book that I'm going to name, Pack Your Parachute. And I used the metaphor of the pilots who don't wait until there's trouble on the plane before they run back and put it on autopilot and try to pack that parachute. As the thing is plummeting from the air with the engines on fire, that parachute is packed by an expert and is ready to go. So when trouble happens, they grabbed the parachute and they jumped and that's a fitting metaphor, I think, for how you look at your business, that parachute should be packed and ready to go, because you never know when the unexpected is going to happen. The unexpected may be a change in technology. It may be a competitor. It may be your health. It may be a recession, a pandemic for heaven sakes or whatever. When you have that parachute ready to go, you grab it. And you're much likely to land safely then trying to pack it on the way down. To your point of what should happen and the P in the parachute is to plan and prepare, and then you go through a number of steps, parachute has nine letters in it, and I've come up with nine crucial steps that if you do it, then you create enterprise value. You create something that others want and that they're willing to pay for. They're willing to maybe pay up for it substantially because it meets their goals and objectives. So if you can think about, looking at what the buyer at some point in time, on the other side of the table with their advisors are going to be asking you and what they're going to want to see. And if you have those things ready to show them and you are able to validate the income stream or the reality of the customers and you're able to create the financial metrics that they want to look at and you have all those things teed up and ready to go, then you will probably have more than one buyer at the table when you create that dynamic. When you have more than one person at the table interested in your business and they know about each other, it creates urgency. It creates motivation and inevitably. It will drive up the price. We have the circumstances and the real estate market at different points and sometimes in some parts of the country right now, when you have multiple buyers at the table that want to buy your house and auction environment you have bidding that goes on. I lived in the San Francisco Bay area for a number of years, and after I sold my business a few years back I put my house on the market and I had multiple buyers and I had people writing me letters, why they were the perfect person to be buying their home and how they had a spiritual experience almost when they drove by my home. They knew this was the home that they should have. And it was an interesting dynamic when you have people teed up and bidding and the price went up almost 18% from what it was listed at. And so in any case, that can happen and does happen and was on my podcast. I have stories where the business sold for five times what it was anticipated to bring or what the entrepreneur thought he was going to get, because his advisor was able to find a strategic acquirer that valued that business for reasons beyond monetary considerations. It was an important strategic acquisition for them that they almost had to have and they raised the cap, their price, five times over what they thought they were going to get. But coming back to your question, it's just a process of anticipating who the buyer is and providing what that buyer is going to want to see when it comes time for you to sell.
Russ Johns: [00:10:42] So you have been through this process, you had a successful business. You sold that. You decided that you were going to say, okay, I'm going to sell this business now. What was the most surprising part of the process that you hadn't thought about or you didn't really expect through that process?
Marvin Storm: [00:11:03] I have sold another business earlier in my career. And it was a relatively small transaction, all things considered, and the dynamics were just different. I had a few people that were interested in the business and it was a process that was not overly complicated and we had to provide a lot of due diligence and things of that nature, but I had it in my mind, that was my experience. I had it in my mind that was going to be a repeat, maybe on a different scale. I had brought in private equity into the transaction. This was a fairly good size transaction. And I just was unprepared quite frankly for what the process was going to be like. It was a factor of a hundred times more sophisticated or complicated than I ever imagined because I hadn't been through that before. And I, just wasn't prepared. If I had been a little bit more prepared, I could have done better for myself with a doubt. Still worked out fine, but I left a lot of chips on the table. And so after I sold, I moved from the Bay area, moved up to Northern California and it's called the Sierra Foothills, gold country, on the way up to the Sierras, lake Tahoe on the way out there. And after a while I thought this will smell the roses and sail off into the sunset. And after awhile, I get tired of twiddling my fingers and I actually got to thinking about my exit experience. And I got to thinking, I'm sure I'm positive that there's a lot of other people out there like me that haven't gone through the experience and are going to, and if they were a better prepared, like I should have been better prepared, their outcome would be better than if they did nothing. And so I got to thinking about that and I said, I listen to podcasts all the time. So I said, what I'm going to do is I'm going to do a podcast, I knew nothing about podcasting and originally I was going to interview people that had sold their business. But after talking to a few people I thought that was going to be a hard slog because everyone thinks their business transaction or sale was the sale that ended all sales and they weren't all that interesting. And then I had this epiphany one day. Why aren't I talking to people that do this everyday, all day long? The people, the professionals, the deal makers. So that's what I did. I reached out to a few people I knew. And then I started talking to people I didn't know. And it's turned into just a phenomenal resource for entrepreneurs to hear four transactions on every podcast, 2 that won, to that didn't and the why and the wherefores behind those transactions and what the takeaways are. And so that's how I got into this and what I did, I'm using my experience and the experience of others that do this for a living, to share with entrepreneurs, what they should be doing to get their business ready for sale. There is a process, there is a logic behind the madness, and it will be madness when you get ready to sell, it will be madness. It will be like a fire drill. And it could be an orderly fire drill where you March out of the building or it can be where everyone is hitting the doors at the same time.
Russ Johns: [00:14:12] Hair on fire kind of activity. We don't know what we don't know until we know. Right?
Marvin Storm: [00:14:19] That's the truer words that have ever been spoken.
Russ Johns: [00:14:21] Yeah. And so until you have that experience or you have somebody in your court or on your side, that can say, here's what to expect, here's what you need to have in place. And here's some things that you need to consider and decide on before you open the door to someone to have this conversation. So I have to believe that there's a roadmap and you've been so kind to say, offer this business exit stories.com/report. And this is something that someone could use to build some awareness into their world.
Marvin Storm: [00:15:00] Yeah. It's just a big picture overview of what you can do to double the value of your business at the time of exit. It's, again, I don't mean to be redundant or repetitive, but it's a process.
Russ Johns: [00:15:13] Yeah. It is a process. Just like building a business is a process.
Marvin Storm: [00:15:17] Yeah. Yeah, absolutely true. Creating a business, a successful business is a process. If you follow a certain set of guidelines and rules and strategies and tactics, you can grow a business, you can scale it, you can make it profitable, you can make it attractive for other folks. And it just is somewhat amazing when you look at the statistic, as I mentioned earlier before, that you have 80% of businesses out there, plus, that don't sell. There's a reason and, as you said, you saw folks that walk away from a successful business, and that is a crime at the highest level, in my opinion, because you've spent all this time building and growing and it has value. And if it's positioned properly, somebody else will see that value and will pay for it. And it shouldn't happen, but it does. And the reason is that it's not something that when you're in the trenches and you're shoveling hard and you're trying to grow and scale your business, and you're putting out fires every day. It's something you don't think about. And because of that, nothing gets done and because nothing gets done, when the time arrives, sometimes nothing gets done. And because no one wants it in the condition that it's in. It's like having a car, you don't take care of it. It's got dents and bumps and the smoke coming out the tailpipe, and no one wants it, but if you've maintained it and you've done everything that you should have been doing to get that car maintained and ready. When it comes time to sell it, there'll be people that are interested in buying them. I don't care what the business is, there will be people interested in buying it.
Russ Johns: [00:16:56] Somebody out there that wants to pick it up and run with it will be there. So I wanted to highlight Jeff Young. He says, I agree, nobody starts a business with the intent of it not going the distance, but it's really essential to have a plan if it doesn't. Great conversation, Russ. Thanks, Jeff. Love that. You're here. Thank you so much for being here and then Charles says, good and trust your parachute packer.
Marvin Storm: [00:17:23] Well, if you don't have someone that knows what they're doing, when you pull that ripcord, you might be surprised.
Russ Johns: [00:17:29] No kidding. It might be a quick trip. Thinking of the impact of business has in the community and how the community will be affected by my exit. Made me think twice right now, changed my course of action. I will better prepare, heard what I needed today. Thanks guys. Adriana. Do you have any questions? If you have any questions for Marvin let's make sure that we get those questions answered. And if you have an opportunity that you want to learn more about what he's doing, you can go to businessexitstories.com/report, and learn a little bit more about this because as a business owner, I want to learn more. So it's great that you're here and thank you so much for being here, Marvin.
Marvin Storm: [00:18:15] Yeah, just one thing, if you want to get a lot of information, the the actual podcast, Business Exit Stories is something you should listen to because it's just a tremendous eclectic number of stories that really happened.
These are transactions that took place and the takeaways are just really phenomenal. And I have learned, enjoyed and learned so much from talking to these professionals that have been in the business for 10, 15, 20 years that have handled hundreds and thousands of transactions and of all sizes from main street businesses up to businesses that do hundreds of millions of dollars in sales and the interesting thing is that whether you got a business doing a half a million in sales or 5 million or 50 million in sales, the problems are generally all the same. The scale is different, but the general principles and problems are always the same. You have employees, you got issues with employees. You have marketing, have issues with marketing, just in a different context, in a different scale. But the principles are the same.
Russ Johns: [00:19:19] Yeah. That is so true. I think it's like just different problems at different levels. And it's so funny that you say that because I've been in large organizations as an employee and done my own thing for over a decade and I've always had a side business in something going on. And it's really amazing to me to think that ultimately, there's not that many pieces of the puzzle that don't cross over to every business. And if you can master a couple of good techniques and build some systems into your overall business and know what the value is and can generate revenue on a scale. It's so important and having a strategy to do that, isn't always crystal clear when you're starting to solve a problem for a community. When you first start the business, a lot of business owners like myself, it's, I want to solve a problem for someone. So you start it and then you continue to evolve and grow it. I I've had a couple of people on, Karl Gibbons, he's built and grown and sold businesses. And Jim White's another one that you should probably have on your show. I think he developed and grew and sold 40 some odd businesses in his career, just an amazing business owner that a wealth of information.
Marvin Storm: [00:20:39] And someone like that figures out how to do it, but he can't start 40 businesses unless he sold 40 businesses. The problem is that most people don't do that. And most people go through it once or twice their careers. When you do it that infrequently, the probability of screwing it up, but you don't want to screw this one up, because this gives you a retirement. This is your future. This can be your legacy. It is a significant transaction and people just don't give it enough consideration before it's too late often. That's the sad part is that it doesn't have to happen, but it happens repeatedly over and over because the unexpected always sneaks up on you.
Russ Johns: [00:21:18] Yeah. And it's funny too, because the bare bones basics, the structures of these businesses can be very similar. Like you said, the employees, sales, marketing, you have a few standard components in every business. You have to have transactions take place on a regular basis in order to generate revenue. And it's okay, let's figure out these systems and let's figure out what it's going to take.
Marvin Storm: [00:21:41] Just put yourself on the other side of the table. If that is the case, that there's a revenue creation mechanism in your business, the buyer is going to be interested in that. He's going to want to validate it. So what are they going to need to have that validated? And if you have it all teed up and there's no questions and it's crystal clear, check that box off. The problem is so often you get to the table and you have a difficult time validating those numbers, making them believable creating questions around them. And that those questions turned into perceived risk. And when you have risk, then the value goes down. If you can remove the perception of risk, that is rock solid, the value goes up. Not rocket science, but not done very often. Not done well very often.
Russ Johns: [00:22:31] Yeah. It's definitely a challenge with execution at all levels. It's so funny and you mentioned earlier, I don't know if we were talking on on the show or not, a lot of business owners also sell their business and then they decide, okay, what do I do now?
Marvin Storm: [00:22:48] That was me.
Russ Johns: [00:22:49] That was you.
Marvin Storm: [00:22:50] I thought I had plan in place, I worked long and hard and I was ready for a break and I thought that it would be nice just to kick back and do nothing. But once you've been in the driver's seat and you're used to the race and the excitement with the race after a while, sitting, watching the race is not very exciting. So that's what generated the podcast. And I'm going to be writing the book and doing some other things, thinking about what's next is equally as important. And I didn't do that very well either.
Russ Johns: [00:23:23] I just enjoy the opportunity to give back by highlighting people like you and sharing the story, just like you're sharing the stories. And it's just, we're living in an amazing time where we can actually connect and collaborate and have this conversation to help somebody else. And I think it's important for people that have some experience. There's nothing wrong with sharing it because the information is out there. If you want to go look at it and if we make it easy, then it's just a way that we can build some value into the world. I think it's important.
Marvin Storm: [00:23:56] That I couldn't agree with more.
Russ Johns: [00:23:59] So before we take off Marvin, I want to ask you a question. And this is one of the things that I keep thinking about in terms of creating value is why and who would want to listen to this podcast that we just finished today. And what kind of value would you like to deliver to the community?
Marvin Storm: [00:24:23] I think that anyone out there that is an entrepreneur that has their own business, or is thinking about getting their own business, you need to plan what's going to happen to that business at some point in time. The value that listening to your show here would bring someone that listening to it is that it might triple the process of a thought process that they consciously began thinking about know what's going to happen. And when I want to step away from all the work that I've done, decades of work that I'm putting in here, how am I going to monetize that? And not only monetize it, how am I going to optimize that monetization to get as much and more than I need at that point in time? That's the trick. Optimization of the monetization event.
Russ Johns: [00:25:16] I love that. I love that. Thank you so much for being here. And I just really appreciate it. Everyone go check out the podcast, follow Marvin. He's out on social media. I put a connection request out to LinkedIn and you can do the same. And also if you have questions and you have information that you want to know a little bit more about, reach out and I believe that you'll probably get an answer.
Marvin Storm: [00:25:38] So yeah, just one, one thing, this report that I put together will be something that will give you some perspective and some things that you can think about as you start to consider, what is that exit going to look like?
Russ Johns: [00:25:52] Thank you so much for being here, Marvin.
Marvin Storm: [00:25:54] For sure. Thanks a lot. Appreciate it.
Russ Johns: [00:25:56] And as always, anyone, if you found somebody or, you know, somebody that needs to listen to this or hear this information, please share it out. Love to have you join the #PirateBroadcast in the community because you're only one conversation away and #kindnessiscool, #smilesarefree and you #enjoytheday. See you soon.
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