But people that haven't heard from you before, give us a little bit about your background in a short one-to-three-minute explanation, I guess.

Okay.

Lifelong business guy.

Always had a passion for business and an interest in business.

Studied business in school, but got disappointed when I realized that they were trying to turn me into this Fortune five hundred bureaucrat, you know, this big company guy, 'cause my heart's always been in the world of small business.

And I had a great opportunity to be a Yellow Page sales rep back in the late nineteen nineties, so I actually got to go in and meet with the owners and managers of all the little businesses that you see in town.

Eventually led me to the world of business brokerage, which I eventually left 'cause it's, it's an awful business.

... like dog leads and, and dog bowls"?

Let's hear it.

All right.

So it's, it's first thing in the morning.

You get up, you have breakfast, and you go to work, and it's close by, so you walk, and you walk through a park.

And when you walk through the park, there's a hot dog vendor getting set up, and there's a sign there that says, "Hot dog and a soda, $5." And you have a $5 bill in your pocket, but you're not interested because you just had breakfast.

It's 9:00 in the morning.

And so at that moment in time, you would rather own the $5 bill.

Mm-hmm.

... what you mean by that?

Sure.

The value of anything is always framed with respect to your other choices, right? And so this is one of the methodologies that appraisers would use to value something like a piece of equipment.

So you could buy a piece of equipment for $10,000 today, and then you leave the market.

So now you're not paying attention to what the equipment is selling for because you have the item in your business already.

And if somebody comes along a couple years afterwards and says, "You know, what do you think this is worth?" You're probably gonna give some kinda number less than what you paid, because we're, we're trained to believe that things sort of depreciate in value.

It, it goes down in value.

Do you consider it a good time to buy or sell a business? Is it right now more of a buyer's market, seller's market, or a balanced one? What's going on?

So David, take a minute and tell us about this unique value you keep bringing to this world.

Yeah.

So as you said, my mission is to help people avoid bad deals.

Over 10 years ago, I started to create content on YouTube where I was talking about my experience as a business broker, telling stories of how people ran into trouble with deals or how we help spot risk or help people manage risk, usually through changing the terms of the deal structure.

And I started to get feedback from the audience.

People would just put comments talking about the bad deals and the money they had lost.

And it's what gave me the motivation to keep producing that content.

Is it easy to have a small business? Is it hard to have it? Is it easy to sell? What, what is it, what is it like in that environment?

Answer the

question.

I'm ready for you because here's the answer to that question.

It's that value is actually not a number.

It's a conclusion connected to a decision.

And this is why it is perfectly plausible for several different parties to come up with a different idea of what the value is, and none of them will be wrong.

And what often happens that I've seen, because sometimes you get invited in to come and consult with other people like attorneys or lawyers or accountants, etc.

How do you value something that's your post-season as opposed to the beginning of the season? And did you put a number on that?

Is it truly day one and kind of what do you recommend to any new business owner?

Yeah.

So the very first thing that I will say is that if you own a business and you intend to sell it one day is you have to understand that buyers out there have access to the internet and they have access to conversations like this one we're doing right now in the podcast and hundreds of others like on my YouTube channel, right? So buyers are not dumb and they've got access to information.

The only reason somebody wants to buy an existing profitable business is because they want to become a business owner without the risk of starting one.

And so when a buyer arrives on the scene, they're going to have two principal questions.

Number one, what is the demonstrable cash flow from this business? Which means you have to be able to process prove it with your financial statements, tax returns, et cetera, what the actual cashflow is.

And the second question is going to be, is it actually transferable to me? Will the cashflow continue after I become the owner? And that's where you get into questions of, are there special talents or skills required? Is there special knowledge required? Do you need a license? Do all of the customers deal just with the owner? Is there a customer concentration issue perhaps? Are there SOPs written down and systems and all that kind of stuff? That's where people will then decide, do I even want to buy this business or not? If I don't believe it's transferable, I'm not going to acquire it.

So what are your thoughts there for anyone that's thinking about maybe setting up this type of program?

How are you perceiving value or what are you looking at to start to gain an idea of value?

Yeah.

Well, when, when a buyer comes and looks at a business, there's, there's two big questions they ask.

The, the first question is, what is the cash flow? So, you know, if we're looking at an EBITDA level of cash flow, it can be very transparent.

You can have really good books in a business.

It can be very easy to see what the cash flow is, or there could be problems related to that, you know, weird, mysterious add backs and all that kind of stuff.

But the first question is, is what is this cash flow? The second question is, and this is the biggest one actually, will the cash flow continue under my stewardship? And that's what opens the door to all kinds of risk questions like, are, are the primary or biggest customers tied personally to the individual who owns the business today? Are they going to want to do business with me once I become the owner? Or, you know, are there, are there other factors here at play? Are there key employees that are not gonna like me, they're gonna leave? Uh, you know, who knows? There's 101 different scary scenarios that could enter the mind of a buyer.

Mm.

So

You raise an interesting point.

Like a lot of the times when we work with business sellers, one of the questions we ask is about their timeline.

Right.

Because when we do the evaluation, we often are able to identify sort of low hanging fruit or problems with the business that could be addressed that would really enhance the value.

So it's pretty normal for us to have a meeting with someone This happened just the other day.

We were reviewing an analysis, what we call an MPSP, most probable selling price analysis with a client.

What would you like to add? Because I'd be curious, you know, I keep saying the same things.