Steven Palmer helps business owners start-up, scale-up, or sell their business.
He started Transworld Business Advisors of Annapolis in April 2021 after 17 years providing software engineering, data analytics, and project management support for the United States Government and Department of Defense.
He has an undergraduate degree (Computer Science) from the University of Mary Washington and a Masters Degree (M.B.A) from George Mason University.
Connect with Steven on LinkedIn.
What You’ll Learn in This Episode
- As an individual, why buy a business when you can start one from scratch
- Some advantages of, and when is it right to, grow your business through acquisition
- Why rising interest rates are making this a perfect time to sell your business
- Free, quick, down and dirty, tips that will help a business owner sell their business
This transcript is machine transcribed by Sonix
TRANSCRIPT
Intro: [00:00:07] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me, brought to you by the Business RadioX Ambassador program, helping business brokers sell more local businesses. Now, here’s your host.
Stone Payton: [00:00:32] Welcome to another exciting and informative edition of Buy a Business near Me. Stone Payton here with you this afternoon. Please join me in welcoming to the broadcast with Transworld Business Advisors of Annapolis, Mr. Steven Palmer. How are you doing today, man?
Steven Palmer: [00:00:51] Stone. I’m great, man. Thanks for having me.
Stone Payton: [00:00:54] Well, we are delighted to have you on the show. One of the first things that I thought might be helpful to give me and our listeners a little context is if you could speak to mission purpose, what what you’re really out there trying to do for folks.
Steven Palmer: [00:01:11] Yeah, it’s it’s quite simple. We have a lot of very, very nice people that live in and around the Annapolis area. We have a lot of very, very hardworking people that have been working their entire lives to build a business, build a brand, provide a service to our community, and we are helping them with their exit strategy. So when it comes time for them to move on to the next phase, whether that’s to go play with grandchildren, whether let’s go hang out on a on a boat or read a good book or spend more time on the links, whatever that is. We’re not here to tell them what it is. We’re just here to help them put a value on their business. That’s really marketed the best deal we can and see them through the sale and the selling process.
Stone Payton: [00:01:55] So what’s the back story? How did you get into into this line of work?
Steven Palmer: [00:02:00] Yeah. So I am a recovering software engineer. I realized I like people more than software and thought I would move up the ranks in the government contracting world, which was completely fine. But my my wife and I made a made a family decision to get a little bit closer to 2 hours. Both her, her parents and mine. And we moved away from D.C.. Out to Annapolis. And in that process, I no longer really had ties to the D.C. area. So I started looking for for that next job. And Transworld grabbed me. Transworld found me on the you the indeed websites or the job boards. They reached out and they kind of said, Hey, we see you have some some background in selling, we see you have some background in management, you’ve got an MBA. Have you ever considered selling a business? Which I thought was intriguing because my father ran a business for 30 years and when he was done, he was just kind of done. He folded up and got got nothing for and I remember him telling me about it over beer, saying, you know, that our construction was no more. And I thought. That’s not right. That’s not right. You work. You’ve worked way too hard. That’s not right. But I didn’t really know what it was at the time. So when Transworld came asking, know, Hey, have you ever thought about selling small, mid-sized businesses? I thought. That would have been great for my dad. And I thought that it’s a good service that that’s sorely needed in my area and something that I thought I’d be really good at. I’ve been running at pretty much ever since.
Stone Payton: [00:03:43] So how would you describe the pros and cons or the decision making process for an individual between buying a business or just just starting one from scratch?
Steven Palmer: [00:03:56] Yeah, I mean, the the pros for starting from scratch is the cheaper is cheaper. The cons are everything else, 1%, everything else. And I could even make an argument that it’s probably not even cheaper once you factor in the amount of money and time and blood, sweat and tears it’s going to take to to reach the same level that some of these businesses that are some of the businesses that the owners have been growing for 20 years, you know, if you catch the right business under the right terms and this is something that we’re we’re very open with, with all of our potential buyers, whether we’re representing sellers or not, we let them know there’s kind of what we think our valuation is. You’re kind of how we came up with that valuation is because if we don’t do that, the bank’s going to do that immediately and the bank is going to shoot us down. So we’re going to have egg on our face. So we’re very upfront, we’re very honest. And if you look at that value and compare it to how much you would have to spend marketing and selling and then factoring your time commitments for all of that and the lack of sleep and the time away from family and the stress and the heartache and all that other stuff, I could probably make a make a case that it’s cheaper just to buy a good business.
Stone Payton: [00:05:11] So are some of your buyers, those that have an existing business and they’re really like acquiring something just like it or complementary to it? Speak to that a little bit.
Steven Palmer: [00:05:24] So there’s multiple ways that it makes sense to buy a business, right? We deal with the individuals that are know, I’m tired of working for somebody, Give me give me a business I can run. And but we also deal with exactly what you’re talking about. Right. And it makes sense if you’re an existing business to buy another business when you are looking to expand your your service providers, when you’re looking to increase the the amount of of customers that you have in a certain area, if you’re looking to expand into a new area, there are a lot of different scenarios where it makes sense. It’s called growth through acquisition, right? And it is by far, in a way, the fastest way to grow a business. So owners that are looking to do that, the questions are really how quickly do you want to scale? Do you have the capacity to scale now or are you going to have to hire? And what’s what capacity is really kind of coming with the business, right? Because, you know, and and what’s the overlap? Are there synergies between the two? Right, Or are you going to have to come in and immediately have to lop off half of the business they’ve been doing? Because you just that’s not an area where you compete. So, I mean, we we walk people through what the acquisition looks like, both from a game of hopscotch right here. Here’s one step, here’s the next step, here’s the next step. But also from a strategic level, once you get this, here’s what they’ve done very, very well and here’s what you’re going to be able to leverage. Right? So we work, we walk buyers through all of that.
Stone Payton: [00:06:50] So how does the whole sales and marketing thing work for you for for your practice? How do you get the the new buyers, the new sellers is one more challenging than the other.
Steven Palmer: [00:07:03] Uh, yes. So we have been in Annapolis, has been around for since 1979, I think is when they officially kicked off. So we’ve got some center of gravity there where things are starting to kind of pull into us. And people are certainly aware of of our name and seek us out. Otherwise, we we are a franchised, so our owners go and live in the area that they service. So I live in Annapolis. I my my kids go to daycare in Annapolis. We go out to eat in Annapolis. We, we network. We everything that we do is in and around the area. So we know the players, we know the banks, we know the the lawyers. We know all the pieces that you need to buy a business. We we do. We do provide it. When we were starting out, we did some things like putting envelopes on doors of closed businesses. Hey, have you ever considered selling your business? If so, give me a call. We still do use postcards. We haven’t done as much with social media, social media, marketing, all that we have in the past and probably need to get back into it.
Steven Palmer: [00:08:08] But I mean, honestly, the next big thing that I’m really excited about is we we also do industry webinars, so we’re partnering with the business coach, we’re partnering with a financial advisor, and we’re going to be putting on a a webinar here in November to kind of not only talk people through what does this raising interest rate from the Fed look like? How does it affect you selling your business? But hey, if you’re are you are you ready to sell your business? If you’re not, let’s talk to this business coach and let’s talk to them about what they can do and what their timeline is to work with you to get you into a sellable position. And then once you have that check in hand. Well, let’s talk to let’s talk to this financial advisor and talk about ways that you can keep the most in your pocket and strategically invested. Right. And then we’re the business coach is is Patrick with Chesapeake think tank and the the financial advisors and also with Ken Alsina and they are two of the absolute best in the business and it’s going to be an absolutely great event.
Stone Payton: [00:09:06] It sounds to me like the work, at least the way you and Transworld choose to approach it, is far more relationship oriented than transactional, far more relationship oriented than I guess I was anticipating.
Steven Palmer: [00:09:22] Hmm, I think it can be run either, but I mean, from my perspective it is. It’s relationship driven, it’s different, you know? And I think I think all of sales should be I don’t think all of sales are. I think all sales should be. I think that is the correct way to go about the selling process. And that’s kind of what we’ve certainly implement here.
Stone Payton: [00:09:44] Well, I mean, you’re clearly enjoying the work. I can hear it in your voice. I know our listeners can hear on the airways. What are what are you finding the most rewarding at this point in your career? What are you enjoying the most?
Steven Palmer: [00:09:56] Oh, man, I got a we did a deal with an automotive shop back in July, closed in July, and this guy is ran the shop for 20 years and he was hoping to pass it down to a son. And his son just decided that that wasn’t really the path for him. And he and the father respected the son, which is the right thing to do. But he really didn’t know what he wanted to do or he really didn’t have an exit strategy at that point. So when I approached him about helping themselves business, because by the way, automotive in this industry, automotive Indianapolis right now is absolutely scorching hot for a number of reasons, but that that digresses from here. But for this specific deal, you know, I approached him and he’s like, yeah, you know, I see my getting out in a couple of years. But honestly, like, if we can do it now, that’s that’s great. I’d rather start spend some more time on the water. I want to go jump on a boat and sail down to the keys. That’s that’s my dream right now. So we we listed his business within a couple of months. We had we had a very intriguing buyer.
Steven Palmer: [00:11:00] Luckily for the buyer, we were able to bring him out of Jersey and down to the Annapolis region, which is just clearly a quality of life improvement. I’m kidding. All my all my Jersey friends out there. I’m completely kidding. I do like Jersey. Jersey’s a great time, but I just couldn’t resist. But we found we found a perfect buyer for him. He’s coming down. We negotiated a a deal where the seller was able to to sell or finance this purchase, which absolutely made the acquisition seamless. We closed it in just over three weeks and probably would have closed it in under three weeks if it didn’t fall. That was in straddling the 4th of July holiday and have a bunch of people that went out of town. So now this guy gets up and on the fifth of every month he gets a check for doing nothing but putting his pants on. And then he goes back into the same business that he always enjoyed working in. But this time now, not as an owner, just as a mechanic, because he still enjoys the work. He just didn’t. He was tired of of the overhead. He was tired of always having to be there.
Steven Palmer: [00:12:06] He was tired of all of the ancillary things that that that grind on those owners. Right. Over time. Yeah. And now he’s going to jump on a boat and take that Caribbean trip in October, November at least, knock on wood and hopefully it doesn’t fall through for him. So I’m really excited for him because, you know, again, he gets this 30 $500 check and start of every month. He gets a paycheck now from from working as an employee. He’s helping the this this new buyer grow this business because he’s got a he’s got a vision. But I don’t know if you’ve heard Stone, but hiring is a challenge. You know, so like he’s helping get this get this guy firmly planted in the ground, you know, bring this guy, this new guy into the community. And I really enjoy getting to know Mark. And Glen was a seller, and Glen is just a fantastic human as well. I mean, that was such a such a fun deal to be a part of, just so happy that it worked out the way it did. And best of all, you know, now hopefully I get a discount on my oil changes.
Stone Payton: [00:13:01] There you go.
Steven Palmer: [00:13:03] At least for the next one or two.
Stone Payton: [00:13:05] But but this example that you share, it’s a great way to underscore the what I’m learning in doing some of these interviews in this arena is that there’s a lot of opportunity to get creative and genuinely serve everyone with with the with the structure of the deal. It doesn’t have to be hand me your keys and I hand you a check, right?
Steven Palmer: [00:13:28] Yes. Yes. That’s that’s that’s exactly right. And we’ve again, been around the block once or twice. So we’ve we’ve seen some of these structured deals. We know how we can kind of help these guys get creative. There’s so many owners that I come to that don’t even know. Yeah. You know, I don’t entertain selling my my business. But how much how much do I ask for it? You know, like step one, which is to put it put a price tag on the asset. And while we we do ask for a commission on the back end, we take such a headache away because there’s always a part there’s always a point in the deal where the deal can just get stuck. And because we’ve seen it and because we have various contacts for, for that deal back in July, we always got we almost got held up for a couple of weeks because the guy was waiting on an insurance provider. Right. The guy guy was coming down from New Jersey, didn’t didn’t have contacts in the area, had to get insurance for for the the LLC that he was setting up to take over.
Steven Palmer: [00:14:29] So we structured the sale as an asset sale and the insurance provider just wasn’t wasn’t responsive. Well I’m in the industry, I live in the area. I know 30 insurance providers, five of which I’ve done deals with and like like a whole lot. So we were able to help them get that within 48 hours, within 72 hours of him reaching out, We we had an insurance quote, you know, like, you know, we’re able to kind of keep things move and keep things going. And because otherwise those deals hang, you know, not scare people away. If you if you can sell it on your own and keep 100% of the value of your business, do it. And you have a price point of mind that it makes sense for you to do it at do it know my services are not perfect for everybody. My services are not right for everybody. But if you’re if you’re nervous about the plan and would like somebody be able to kind of come in and help help you see help see you through it, we’d love to be able to help out however we can.
Stone Payton: [00:15:29] So I was planning to ask you a question about mentors and but it strikes me that one of the tremendous advantages of joining a team like Transworld, you must have some have had some built in mentors like Right Out of the Box that really helped you navigate some of this terrain early on.
Steven Palmer: [00:15:51] Yeah. Oh yeah. Oh yeah. You know, all of our. So what’s great about Transworld being a franchise is not just the fact that we’re interconnected to our 250 offices around the globe, but not that not just the fact that I can see every deal that’s being worked at any point in time or all the way back to 2014, 2015, and use that data to help my clients. But I mean, the training, not just the hey, you’re brand new, come hang out in Florida for a week and let us walk you through what it’s like to sell a business, but also the ongoing training as well and the refresher courses. And they provide all of that stuff for us. It allows us to kind of stay up to pace, stay up to date on the industry comings and goings. And I mean, starting with with Glenda dad, who was the the first guy to kind of talk to me about valuing a business and how how you go about recasting financials and what you’re looking for and how you how you ultimately get down to some of that to some of the other industry partners that that and Kyknet and team at Transworld have been able to bring in and provide us. We’ve got partners with with folks at Bennett Benetton’s that were able to are able to help people pull money out of their existing retirement accounts, early tax free to fund the purchase of businesses today. I mean, like some I mean some of the resources they’ve been able to just introduce me to or have been have been world changing.
Stone Payton: [00:17:16] Well, it certainly sounds like it. So this is kind of a tactical question, and maybe I’m watching too much news, but it has to do with timing. And for your listeners out there, if you you know, because sometimes people will hear this content six months, a year, two years after, after we’ve captured it, we’re having this this conversation at a time when interest rates are kind of on the rise. Does does that have an impact? Does that influence timing? Like is it a better time, a good time, a bad time in terms of buying or selling a business?
Steven Palmer: [00:17:51] Sure. I mean, money is never going to be cheaper than it is right now for the foreseeable future. Right. The Fed has has signaled that, hey, we’re going to need to continue to raise interest rates to fight inflation right now, which means every dollar that you borrow today is going to require. More overhead, certainly than yesterday, but less overhead is going to tomorrow. So it’s being able to get some of the buyers off the fence. With that being said, buying power has now certainly decreased as well. So if you’re considering selling, you’re going to want to be able to enter that market soon, because one of the things that we always talk to our sellers about is the number of buyers, the number of potential buyers, and how can we increase that buyer pool. Right. And, you know, sadly, what the Fed’s doing, whether it’s necessary or not, history will be able to tell us that I’m certainly not qualified, but the Fed is effectively lowering our buyer pool. So if you’re looking to get out in the next next year or next, next three years, now is probably a really good time to hurry up and and sit down and chat. So see if we can kind of get you out there sooner. But it certainly is getting some buyers off the fence as well, which is good.
Stone Payton: [00:19:10] Yeah. So maybe a related topic, just timing in general, irrespective of of current economic conditions. If you’re a business owner and you’ve got your eye on exiting at some point in some way, what kind of what kind of runway do you need? Because I’m operating under the impression you need more than just a than a few months. You’ve got to get some you’ve got to get some things put in place, right?
Steven Palmer: [00:19:37] Yeah. Yeah. It’s not it’s not short. 8.3. 8.3 months is the average sale time. I don’t nobody’s been able to tell me what 8.3 of a month is. So there’s that that makes that makes me think that a mathematician came up with that number and not a not a human. But even so, if we if we say eight months, it’s gonna take eight months to sell business. I mean, I mean banks are taking anywhere between 45 and 60 days for a loan alone, right. So you figure you’ve got, you’re walking into to two months. If somebody needs to borrow money, then there is the courting period and then there is the due diligence period. And lawyers are involved. And sometimes there’s there’s CPAs involved or bookkeepers that need to get involved to review everything and make sure the financials align. And we certainly recommend that all of those people play and make sure that both buyers and sellers have the appropriate professionals representing them on both sides because it’s an expensive purchase. You want to make sure that you are doing your homework and getting what you you expect to get out of it. You walk into these deals with eyes wide open. I mean, it’s it’s a long it’s just it’s just a long time.
Stone Payton: [00:20:52] Yeah. Yeah. And then before all that, as a as a seller, as a potential seller, I mean, you got to get your books clean, you got to get your value, you got to do a lot. So they need to be talking to you sooner than later.
Steven Palmer: [00:21:05] You know, it’s it certainly helps. We’re doing a deal now that I sit down with the owner and we’re we’re trying to get down to a number that’s that we the term is sellers discretionary earnings. So all the value all the profit that the owner is taken out of the business, which goes beyond just their paycheck. Right. It could be their health insurance, it could be their car payments, it could be their cell phones. It could be a variety of things. Right. Yeah. And then not to mention, you know, you kind of add all of that back against the value that you report to the IRS or subtract that if the value is negative, which hopefully most business owners are reporting something negative to the IRS. But if you’re taking money underneath the table, that gets more difficult to justify to the bank because it’s not going to necessarily show up on some of those financial documents as well. So it’s great for business owners to be able to kind of do that, to kind of be able to just put that cash straight in their pocket. But when it comes time to sell, it is advantageous to put as much of that back onto the actual paper as possible and to do that for two or three years leading up to it. And again, that’s typically what I end up doing, is trying to pass that along to to Patrick or some of the other really great business coaches that we have in this area. That’s that’s they they have they have plans. They they help people get back involved. But from my perspective, when it comes time to to to market this baby and certainly when I start representing you with a bank to get a loan, the cleaner your financials are, the easier my job, the easier my job, the faster your sale is, the faster your sale is, the sooner you’re on a beach.
Stone Payton: [00:22:42] I love it. Okay. I’d like to leave our listeners with with a handful of I’ll call them pro tips. Just to some do’s, some don’ts, some things to read, some things to be thinking about. And of course, the number one pro tip gang is reach out and have a conversation with Stephen Palmer. But but maybe there’s a couple of action we’ll just kind of down and dirty tips that a lot a business owner would benefit from maybe on both sides selling, you know, buying and selling anything you can offer on that front.
Steven Palmer: [00:23:11] Yeah. Reach out to me. Have a conversation. We’re we’re commission based and we only get paid on success. So we don’t take any money up front. We don’t. We don’t get paid by the hour. So even if you are just thinking about it at the start, let’s have a conversation. If you’re in the Annapolis area, let’s let’s sit down and have a cup of coffee. There’s there’s no reason we can’t. Again, to me, it is a relationship driven ballgame. So Thursday, there’s a book called the The Private Equity Playbook. I kind of enjoyed reading that and also know what the most important factors are for you, right? So sometimes that is let’s get X number and we’re going to hang on till we find a buyer that’s going to get us X number. Sometimes that is, I just need to get out, get me a ham sandwich. And sometimes you, sometimes there’s there’s somewhere in between, right? Yeah. We don’t want to just give it away. But at the same token, we really kind of we need to expedite this. So when we talk to you about things like let’s, let’s price this aggressively, let’s look at seller financing, let’s let’s use some of these other tools and tricks that have been proven to sell businesses faster. You know, not everything’s right. Don’t get me wrong. Everyone’s got their own situations. Everyone’s got to make their own decisions for themselves, but really give them some some consideration because we’re we’re saying this to you because we’ve been through it and we know we know what the outcome will be.
Stone Payton: [00:24:36] What a pleasure to have you on the show, sir.
Steven Palmer: [00:24:39] Oh, this was great, man. So. So thankful that you you reached out and we were able to make this happen. It was a lot of fun.
Stone Payton: [00:24:47] Me, too. Okay. Let’s make sure that our listeners have an easy path to to get in touch with you, man. Whatever’s best. You know, email, website, LinkedIn, whatever you feel like is appropriate.
Steven Palmer: [00:24:57] Yeah, absolutely. So don’t hesitate to reach out to me. My email address, which is s pal m e r et pt WorldCom. If you want to come check out our website and see what businesses we have for sale, it’s t worldcom slash annapolis. And then are the office numbers the easiest way to get hold of me? It’s 4108426063. And if you want to bypass everybody else, just hit extension zero. They’ll come right to me.
Stone Payton: [00:25:27] Well, thanks so much for hanging out with us this afternoon. Man. This has been fun. It’s informative, it’s inspiring. It has me believing that even on our exit at Business RadioX, maybe I can still hang around and do some of the fun stuff.
Steven Palmer: [00:25:41] Absolutely. That’s when the fun begins. You got it right, Stone.
Stone Payton: [00:25:44] All right. Well, thanks again. You’re doing important work, man, and we sure appreciate you.
Steven Palmer: [00:25:49] I appreciate you, sir.
Stone Payton: [00:25:50] All right. Until next time, this is Stone Payton for our guest today with Transworld Business Advisors of Annapolis, Mr. Stephen Palmer, and everyone here at the Business RadioX family saying we’ll see you next time on Buy a Business near me.
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