Intro: Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for High Velocity Radio.

Lee Kantor: Lee Kantor here. Another episode of High Velocity Radio and this is going to be a good one. Today on the show we have business coach and exit planning advisor with Greater Heights Coaching, Len Bruskiewitz. Welcome.

Len Bruskiewitz: Great to be here. I appreciate the invite, Lee.

Lee Kantor: Well, tell us about Greater Heights Coaching. How are you serving folks?

Len Bruskiewitz: Uh, I really work with business owners, typically those aged 55 and up. And what I do is I help them get themselves, most importantly, and their companies ready to transition out of on their terms and on their timeline. And this is an area of coaching that is, I think, a not as well known, uh, you know, exit planning tends to be one of those things that happens once in a business owner’s career. So there’s not a lot of education around it, not a lot of help. And so that’s what I’m trying to solve. And, and I, you know, I’d love to share some of the stats with you as to why this is so important. But needless to say, there are a lot of small businesses owners who are in that age category, and I’m trying to help as many of them as I can.

Lee Kantor: So what’s your backstory? How’d you get involved in this line of work?

Len Bruskiewitz: Well, interesting. I spent 30 plus years in corporate, almost all those years in high tech companies who served small businesses as their clients. So I spent significant amounts of time at Intuit, at constant contact at grasshopper, the virtual service, virtual phone service, a website startup. So I interacted with probably tens of thousands of small businesses over over my career. And I also grew up in a small business. So I had that as a background as well. And when I left corporate, I decided I. My passion was around helping small businesses. And one of my first clients was a 72 year old woman who had built a really successful retail business with her husband. And they’d run it for 50 years. And when he died, she was just concerned about her legacy. So I really got involved in helping her figure out what her options were. We picked one. She worked out that plan and is now, uh, you know, comfortable that her legacy that she and her husband built was preserved. And that really touched me. Uh, and I said, gee, I think I found my why. Uh, so that’s the story of how I got to focus on this segment of the market.

Lee Kantor: So how are you defining small business? Because I know the definition for a listener might be different than maybe what the government would call a small business.

Len Bruskiewitz: Yeah, absolutely. So my, my real, uh, focus area is on companies generating probably 1 to 15 million in revenue. And look, I, you know, I can help companies that are smaller and companies that are bigger, but typically at about 15 million. A lot of times that’s no longer the owner who is actively involved in running the day to day business. And my passion is really around helping the owners, uh, get their succession plan in place. So that’s, that’s how I define it. I know, you know, IBM would say 500 employees is a small business. That’s that’s not how I think about it.

Lee Kantor: Now, can do you have any stats to just let the listener know, like what percentage of businesses make $1 million a year?

Len Bruskiewitz: Uh, not many, you know. So, uh, there are about, I’ll give you some stats that maybe will help frame this. There are about 6 million small businesses in the US that that have between 1 and 20 employees. And then there are about 17 million that are sole proprietors. So I’m guessing that most of those sole proprietors are not generating $1 million a year. Um, so I’m, I would say that, you know, in that 1 to 20, uh, employee category, there are about 6 million of those businesses, I would guess, you know, maybe half of them are generating more than $1 million in revenue. Uh, so it’s still a relatively large number. Uh, but it’s not, you know, it’s not tens of millions.

Lee Kantor: Right. And a lot of the listeners may be a little surprised to hear that. I mean, there’s what, 400 million people in America.

Len Bruskiewitz: Yeah. Yeah. Now, small businesses employ, you know, over half, half the workforce. So there are tons of employees working for small businesses, but not many of them are really large. They, you know, they tend to be kind of mom and pop organizations now.

Lee Kantor: Okay, let’s, let’s, uh, talk about what you’re actually doing. So I own a business. And, um, at some point it occurred to me that I, I’m going to want to do something else or I’ll retire or something is going to happen where I’m going to have to exit my business. What is the time frame I should be thinking about? Even communicating that out loud to other people in my network and also to somebody like you.

Len Bruskiewitz: Yeah. I’m going to give you two answers. Uh, and I don’t mean to be funny with them. The first answer is, from the day you start, you should think about where you want to end up. Uh, really, it’s, you know, begin with the end in mind. That’s a Stephen Covey, uh, you know, quote, uh, really? You should start, you should start thinking about it at day one, because if you, if you know where you want to end up, it’s much easier to figure out the steps to get there. So that’s kind of a theoretical answer. The more practical answer, and probably the one you were looking for, is you should really seriously start thinking about, uh, the things you need to do to exit successfully. At least 3 to 5 years in advance of that. And I’ll give you just a couple pieces that add up to that. So, um, if you have any kind of a bad accounting, right, if you’ve got some stuff that happened in your business that you’re not all that proud of, typically, uh, potential buyers are going to look back three years, uh, for your financials. And it’s if you want some of those bad things to just disappear, you know, and your three, you know, your three years out, there are some ways to structure your business so that you can either minimize or get rid of, uh, taxes on the sale altogether.

Len Bruskiewitz: Many of those require multiple years in order to be able to take advantage of. And the final one I’ll tell you, is the average amount of time it takes between when you list your business for sale and when it actually sell is about 12 months. So right there, there’s a year, there’s typically a follow on period where you’re still involved with the business. Let’s say that’s six months. So you’re in 18 months there. But that doesn’t take into consideration the things you need to do to get ready. And that’s, you know, getting your books in order, documenting your processes, getting independent from your business. So that’s why I say 3 to 5 years is really the right kind of time frame, uh, to be thinking, to be talking to somebody like me in terms of your network. Um, you know, that’s a little trickier. You don’t want to tell, you know, your employees maybe too early, uh, but you also want them to be involved in the process as well, because ultimately part of getting ready is getting your staff, your employees, your team leveled up, right? To take on more responsibility so that you can step back as the owner, which is going to make your business much more scalable down the road.

Lee Kantor: So now for most people who go through this process, like you said, they probably only do this once per business, hopefully. Um, and who ends up buying their business? Is it like you said, you put up a for sale sign? It’s not like a house where, you know, it’s I put a for sale sign up and then, you know, people start coming by or, uh, there’s, I would imagine there’s business brokers that can help you, but how does a person typically exit? Is it by selling it to a stranger? Or is it to selling it to, uh, maybe somebody else in the industry? Or is it maybe to their employees? Like, what are the common ways to exit?

Len Bruskiewitz: Yeah, there are five really common ways that business owners exit. And I’ll walk through them and really quickly just cover some of the pros and cons. The the first way that I’ll talk about is, is succession. So typically this is passing the business along to a family member, might be a child, might be a nephew, niece, whatever, some, some related family member. And the pros of this are, you know, you keep the business in the family. The cons of it are those buyers. Those family members typically don’t have a lot of money to, to buy you out as the owner. And just because they’re related doesn’t necessarily mean they’re a great potential business owner. So succession is the first option that I’ll talk about. One stat around that is that according to Ernst and Young, about 65% of business owners think that a family member is going to take over. It only happens about 25% of the time. So there’s a big gap there. And most of that gap happens because of a lack of communication. All right. The second big category and you’ve hinted at this one, is selling to a third party. And I’m going to talk about two different types of buyers in terms of a third party. The first buyer is what is called a financial buyer. And this is somebody who literally just wants to buy your business because they want to, you know, they want to be a business owner. Uh, they may come from corporate, they may come from some other industry.

Len Bruskiewitz: So they don’t have, you know, they’re not in your industry per se. And so what they’re doing is they’re just going to buy the business that you have, and then they run it their own way. Uh, typically these, uh, are not going to be the highest paying buyers, but, you know, they may have, uh, interest in continuing the legacy you built, keeping your employees, those kinds of things. The second type of third party buyer is called a strategic buyer. A strategic buyers are companies. They’re typically they’re not competitors, but maybe you share the same customers. And so they see the value in buying your company because maybe they can sell their products to your customers or they can sell your products to their customers. So there’s some synergy synergy there where they see by buying your company, uh, they make the whole thing better, right? It’s a one plus one equals three time equation. They typically are one of the highest paying buyers because they see increased value out of the combination of the companies. Uh, some of the cons are they may not care as much about your employees, your legacy, those kinds of things, right? They’re, they’re really buying it because they see a benefit, uh, combining the two entities. The third option is one that you talked about. It could be competitors or partners. Um, you know, some, some business owners are too excited about selling their business to a competitor.

Len Bruskiewitz: It’s kind of their baby and, and they don’t want to see it go to a competitor, but competitors sometimes are willing to pay a high price. Right. And partners may be, you know, people that you partnered with in the business or, or people who sell your product. So those that’s a third party, but kind of a different type. Uh, the fourth option is selling to employees or management. Uh, this one has a lot of the same benefits as a succession, a family succession plan. They typically don’t have a lot of capital to pay. Um, but again, you can, um, probably have more say in how the company is going to be run down the road, right? It’s people you trust. Uh, again, this the same con as with a family succession. Just because people are great employees doesn’t mean they’re great owners. They may just not have the same entrepreneurial spirit that you do. Um, so, you know, turning a selling to, to employees or management is definitely an option. Um, and then the fifth one, uh, I talk about it because in some cases it’s real and this is just a shutdown and a liquidation of the assets. There are some businesses who maybe are worth more just by selling the equipment or the real estate than they are as an ongoing concern. So those are the five with a, you know, quick, quick coverage of the pros and cons of each.

Lee Kantor: Can we talk a little bit about, uh, service industry? You’re in a service business. I’m in a service business. What about the folks out there in service businesses that don’t have maybe real estate or equipment? What is their best move when it comes to exiting?

Len Bruskiewitz: Yeah, This is where, um, I’m going to separate the businesses that are just literally a person, right? So, so a service business like, you know, a plumber, for example, right? Or a, or a sole practitioner, a lawyer, a lot of times the value of their business is really only going to be tied. It’s really only going to be tied to the value of their customer list or more importantly, their process. Right? So you may have, as a sole practitioner, a lawyer, you may have some really high end clients who are on retainer, right? And that’s going to be valuable to a new, uh, to somebody who wants to buy into the business. On the flip side, if you’re a sole practitioner, a lawyer who doesn’t have any recurring business, every client you get is a one time deal that’s going to have less value. But when I get to the to the process Part is there’s something unique about your business, even if you’re a one person practitioner that can have huge value. If that thing you do that, that special sauce is something that you can document and that you can pass along to a new to a potential buyer. So that’s going to be, that’s going to be different for every business, right? But there are sole practitioner businesses are very small organizations who have a special sauce. They know how to do something better than anybody else. And it’s hard to replicate without having that knowledge. That’s where value is built. But on the flip side, there are organizations who have very nice businesses, but they don’t do anything unique and they could be quickly copied. Those are the ones that are going to struggle in terms of their valuation, because they’re to somebody. It would be easier for somebody to just go out and Replicate it then. Then buy it. So hopefully that helps.

Lee Kantor: Yeah. I mean, I want to share something that happened to me with my dentist. My dentist, uh, was older guy. He sold his business to somebody. All of a sudden I get a note, an email that says, you know, I’m retiring now this person is going to be the new dentist, you know? See you later. Bye. And then for me, I was like, well, I was going to my dentist, you know, if I’m going to be now going to a different dentist, why don’t I just find a different dentist closer to me? Or, you know, that’s not this person. Like, like, you can’t just transfer that relationship in skill just because the owner sold it. I mean, how does a service provider prevent that kind of in that case, it was a very clumsy and clunky transfer. But how would you. How do you protect that from your customers? Not just leaving when you leave?

Len Bruskiewitz: Yeah. And I’ll look at it. I’ll answer that. But I’ll first address the value question that that buyer of that business probably didn’t pay a whole lot, right. Because they did it so clumsily. Right. And all they were all that fire bought was a list of clients that they had to then really go out and sell again. Right. So how would I have done this differently? I’ll give you a couple ideas. One is, uh, that email would have come out much earlier, right? It would have said, hey, I’m going to be retiring and here’s the plan, right? I’m going to be bringing in somebody new for six months, nine months, a year. Um, I’m still going to be around, right? I’m going to be teaching him or her everything that makes our practice so great. Right? And so it would be focused on. On making sure that the existing customers know that the experience is still going to be great, right? So that’s what I would do is, is have a transition period and message that, you know, yes, the person’s going to change, but the process isn’t going to change. You know, maybe the office staff is going to be the same. Maybe the process is going to be the same, right? Those are the ways to to help encourage clients like you to stick around. But that didn’t happen, right? It was just kind of a very awkward handoff of, you know, you used to see me, now you’re going to see somebody else and, you know, kind of good luck. So I don’t think that was a great transition. And based on it, I’m guessing that the selling dentist did not get full value for what they built.

Lee Kantor: But those are some of the services and activities. As a coach, you’re helping your clients with, right? To make those transitions smooth, to have kind of a roadmap and a game plan and a playbook to execute that type of a transition. So you can kind of help the seller get the most and help the buyer kind of at least be on the right track.

Len Bruskiewitz: Absolutely. So this is all about some of the things I talked about earlier where, you know, documenting your processes, figuring out what makes you unique and really memorializing that. You know, having, having, uh, the business able to transfer, right? So, so not being dependent on only one person. And I understand, you know, the example you gave a dentist is the dentist is the service, right? For the most part, they’re the ancillary things about it. But you know, you can’t clone people, so you can’t guarantee that part of it. But all the processes that that live around that? You know, how easy is it to make an appointment? How is, you know, is the billing accurate and and comfortable for clients? Those are the kinds of things that I help them with to make sure that, you know, when the transition date comes, that those are smooth, understood, and passed along without the awkwardness that you describe.

Lee Kantor: So now, okay, let’s play out what happens. I raise my hand, I go, hey, Len, I’m 3 to 5 years out and I’m thinking about exiting. Uh, what are some of the questions you’re going to ask me? What are some of the homework I have to do in order to get the most out of this relationship?

Len Bruskiewitz: Yeah, I, I work on a three step process. The first step that I is what I call the evaluation step. So I basically come in and do a professional evaluation of what your company is worth today. So this sets a baseline for the value based on your financials, your historical financials. Uh, some of the intangible things like, you know, what’s the culture of your company? What’s the style of your, of your revenue? Are you generating it on a recurring basis or not? And so what I do is I come up with a valuation. Um, and I’ll be honest with you, most business owners are disappointed by that valuation. They think their business is worth $10 million. And I have to tell them it’s the market says it’s worth 2 million, right? Uh, the reality is though, that we can change that. We can, we can. That’s part of why it takes 3 to 5 years. Uh, so but this is a baseline to compare against. So step one valuation. Step two is evaluation. So I go through about 40 things with a with a client that either add or detract from value. These are things like how concentrated are your customers? Are they? Uh, what’s your retention rate? Um, what’s the skill set of your staff? Um, do you have great brand awareness or not? So all the about 40 things and that’s, that’s an interview.

Len Bruskiewitz: Uh, so I sit down, we spend several hours going through that and, uh, I end up ranking everything red, yellow, green, and those things that are red are, I’m saying are, uh, are detractors of value today and things that need to be worked on. Right? So that’s the step two. And then step three is the implementation phase. So, uh, I deliver a blueprint to clients where I say, here’s, here are the 40 things. Here are your red yellow greens. This is what I recommend you work on. If you want to go do those things yourself, you might guess right. If you want my help with them, then we move to the implementation stage. And I helped them on certain things. I will also ultimately point them. You know, maybe they need a new account or maybe they need some legal help to solve some of these things. But that’s the implementation phase. And that’s what happens over time. Those first two phases, the evaluation and evaluation happen within about a month. Those are pretty quick. And then that implementation can happen over time.

Lee Kantor: Now in order for an entrepreneur to sell their business, is this something they can do on their own? It’s like a this can be can this be a for sale by owner situation? Or is this something that you know what you need some sort of a broker or a realtor to help you kind of exit with kind of the most amount of money?

Len Bruskiewitz: Yeah. There are, there are multiple ways just, you know, it is similar to selling a house, although, uh, part of the part of the challenge with selling a business is there aren’t the comps like you have in real estate, right? You can’t see five other businesses that are similar that have sold because most of this happens privately. And so it’s, it’s much tougher. Uh, can you, can you sell it yourself by putting up a for sale sign? Obviously, yes. Uh, that doesn’t happen very often. You know, you, you just don’t have the reach. Uh, business brokers are one potential, uh, the value of business brokers is they have a network of potential buyers and they also will do the marketing, right? They’ll, they’ll get the word out to more potential buyers than you would, um, by yourself. There are also kind of private marketplaces, uh, where you can list your private and public places. You can list your business. Um, some of which have a lot of reach. Um, but then, you know, you as the owner are sifting through people who are kind of they can reach out to you, you know, and, and not be qualified at all. And you as the owner have to deal with that. So, um, you know, there are pros and cons to each other.

Len Bruskiewitz: Also, a lot of times what happens is business owners will have those kind of, I talked about the strategic buyers. So there’ll be somebody who’s dealing with the same kinds of customers, maybe in a, in a, in a adjacent industry, those, those happen a fair bit. Um, kind of organically. The one thing I’ll say on this, uh, so I do not get involved in the transaction. I’m not a, you know, business broker. I don’t sell businesses as part of my thing. The one thing I’ll say is most, most sellers, as you hinted at, they only do this once in their lifetime. Many buyers are buyers. They’re buying up companies constantly. Um, and so they have a lot more experience in doing this. Uh, and, you know, typically inexperience, uh, in, in this transaction is not a good thing, right? So it does make sense to have some professional help on your side, whether that’s a business broker, whether that’s a team of advisors, um, you want to know the ins and outs, uh, because you’re going up against people who do this for a living. So that’s my advice. Uh, you know, you can sell yourself, uh, I wouldn’t normally recommend.

Lee Kantor: Now, is there a story you can share about one of your coaching clients that you helped get? Maybe something, uh, you know, a sale that maybe exceeded their expectations, don’t name the name, but maybe share the challenge that they came to you with and how you were able to help them.

Len Bruskiewitz: Yeah. So, so this was a business that, uh, you know, was, was a good business, a profitable business, but the owner was involved. I’m not going to say 24 over seven, but almost 24 over seven. And, uh, they did everything. You know, they, they answered the phone, they did the scheduling. Uh, and so it was, it was an all consuming business for them. Um, and so they owned another business that was, that was not as consuming and they wanted to keep that one, but they wanted to sell this one that really, uh, as much as it was profitable and growing, uh, did not help them in their, in their kind of work life balance. Right. So, um, we ended up, uh, doing a bunch of things to, to understand what the, what the goods and bads in their business, you know, what the red yellow greens were fixed, some of those red. Uh, the good news though, is they they knew what they were, even though maybe there were some they couldn’t fix. They knew what they were. And we’d talked to them and say, this is why this is the way it is. And then we ended up, uh, working with a business broker who was able to find about 20 potential buyers for this business.

Len Bruskiewitz: And, uh, the business ended up selling for more than, uh, the assessed value, the valuation that we had done. And as much as that was great for the owner from a financial perspective, the best thing for them was that they got their life back, right? They, they weren’t no longer tied to their phone. Um, and so that to me was a huge win because it was, uh, not just the financial piece. It was also, uh, their personal life had a huge upgrade. So that’s a, that’s a great story. I like, I also, you know, the, the story I began with with the the 72 year old business owner who told me when we first started talking that she couldn’t sleep at night because she was worried about preserving the legacy that she and her husband had built. And then when we were done, she said, now I can sleep. I know it’s I know it’s going to be okay. So those are two quick stories that that I really feel good about. And we’re great at things now.

Lee Kantor: Is there any low hanging fruit for a business owner who maybe they’re not 3 to 5 years out, but they’re getting close and they know they’re closer to the end than the beginning. Is there some activities they can be doing today that’s going to ultimately increase the value of their business? Like, what are some of those kind of to you? Probably no brainers because they’re just part of it, but to them it might be something they haven’t really leaned into yet.

Len Bruskiewitz: Yeah, that’s a, that’s a great question. And I do I have four areas that, uh, any business, any business owner can start today, you know, without my help. I love to help them, but. But they should be thinking about these four categories. The first is personal. Uh, the owner should start to think about what they want to do, post business and share that information with, most importantly, their family. So what do they, you know, they’ve run a great business for n number of years. What does it look like when they leave? And I’ll tell you why this is so important. One of the biggest reasons that businesses don’t sell is because the owner can’t find or can’t see the same value that they get from working and running their business, as they can see. On the other side of the transaction. And so they get cold feet because they see, this is what I know, this is where I get value. This is where I get meaning in my life and they haven’t done enough to. Figure out what’s next. So that personal side is really important and it’s also. There’s a financial component to it too. What are you going to need to do your. Next, next big thing, whether that’s retire or whatever. How much financial assets. Will you need? Right. So the personal side is one key piece. Therefore, the second key piece is really focus on the business. So narrow down. For example, what. And focus on what you’re really good at and really understand what drives your business. So an example I’ll give is I’ll talk to to business owners and I’ll say, tell me about your customers and I’ll say, okay, there are these, these, these and these.

Len Bruskiewitz: And then I’ll say, well, what else? And they’ll say, oh, we have this, this client who’s been with us since day one. And you know what? They’re a real pain and we’re probably losing money on them. But they were early, so we. You know, we keep them around. And I tell them, get rid of them like fire that client. And they say, but oh, but we’ll lose revenue. And I’ll say nobody. Ultimately, buyers care about earnings. That’s how they value companies is a multiple of earnings, but they also value not having to take on clients that are a bad fit or that are a pain. So, uh, the second piece is really kind of, you know, optimizing the current business focus on the products and services that you’re really good at. Get rid of the rest and, you know, understand what drives your business. You know, how, what, how many leads do you need to get a client, that kind of thing? Make sure you really understand that and optimize the third piece. So step three is focus on the processes in your business. Make sure your accounting is good. Make sure you’ve documented how your business runs, right. This used to be really painful. You had to use. You used to have to sit down and write everything out of how, uh, how your operations work. Now you can fire up a video and record yourself explaining how the process works a lot easier, right? But documenting your processes, getting your accounting in order, that kind of, you know, the administrative side of your business, the things you should do now.

Len Bruskiewitz: And oh, by the way, this doesn’t benefit you at exit. This benefits you today, right? You become the business becomes less dependent on you as the owner, which is a big stress reductor in the meantime, right? That’s the benefit you get now. And then the fourth is really think about your organization. So we talked about one two person company. So it’s not like you’ve got this massive staff to delegate to. But again, figure out how to how you can make your business easily transferable. And for the people you do have on staff, make sure you are delegating tasks to them. Uh, that gives them more ownership of, you know, more ownership of the business. They feel more, uh, relied upon, which is actually a good thing. Uh, you know, increasing responsibility is a good thing, uh, in, in businesses because they feel more, um, you know, more valuable as an employee. So those are the four things. Yeah. So it’s that fourth one is really worry about your culture, right? Make sure that your organization is stronger and is able to exist in a high level, operating a high level without you being involved in every task. So hopefully that’s helpful. You know, those four big areas that you can do today, uh, that again, are going to pay short term as well as long term benefits.

Lee Kantor: Well, Len, if somebody wants to learn more, have a more substantive conversation with you or somebody on your team, what is the website? What’s the best way to connect?

Len Bruskiewitz: Website is greater heights coaching.com. And there, there’s a bunch of information. Uh, many of the things I’ve talked about around there in terms of like the exit options and things that you need to do. Uh, and you can also schedule some time to talk to me, which is a no obligation. I’m happy to talk to anybody about, uh, their plans and see if I can help them.

Lee Kantor: Well, Lynn, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Len Bruskiewitz: Thank you.

Lee Kantor: All right. This is Lee Kantor. We’ll see you all next time on High Velocity Radio.