Episode 51: Selling Your Business With David Barnett

On this episode Bella speaks with David Barnett, an Author, Speaker, Educator, Seminar Host, Consultant,  and Business Buy/Sell Process Coach. David Barnett They discuss things you need to keep in mind when considering selling your business.  These include: Biggest mistake pet business owners make when running their business Understanding that there are several reasons people sell businesses. Most of the time it is not for retirement. Learning that keeping your business in the best shape to sell (i.e. have strong processes in place) will actually benefit you even if you aren't yet selling it. When you will and when you won't benefit by using a broker. A high level overview of the selling process. David Barnett has been working to help the owners of Small and Medium Sized businesses for almost 20 years. As a former business broker and financing broker, Barnett has helped people buy, sell, plan, manage and finance businesses. Since 2014, Barnett has authored 6 small business books, 3 of which have become Amazon best-sellers. You can reach David in the following ways: FaceBook: https://www.facebook.com/DBarnettMoncton Clarity: https://clarity.fm/davidbarnett Twitter: https://twitter.com/dbarnettmoncton Linkedin:  http://ca.linkedin.com/in/davidbarnettmoncton Blog:  http://www.investlocalbook.com YouTube: http://www.youtube.com/c/DavidBarnettMoncton Soundcloud: https://soundcloud.com/dbarnettmoncton Websites: www.DavidCBarnett.com BusinessBuyerAdvantage.com HowtoSellMyOwnBusiness.com Subscribe To The Show: Transcript: This is episode 51 of Bella in Your Business. Welcome to Bella in Your Business, where Bella will discuss anything and everything about your pet sitting business to help you land on target. So get ready—Bella’s got your chute. Let’s jump. Welcome to Bella in Your Business. My name is Bella Vasta with Jump Consulting, and today I have David Barnett with us. David has worked to help small and medium-sized business owners for almost 20 years. As a former business broker and financing broker—so he’s a double threat—Barnett has helped people buy, sell, plan, manage, and finance businesses. Since 2014, he’s also authored six books, three of which are Amazon bestsellers. Bella: Without further ado, welcome to the show. David: Hey, Bella. Thanks for having me on. Bella: I’m excited to have you because the topic of buying or selling a pet sitting business is hot. The pet industry’s been around since the late eighties, really picking up in the nineties, and by the 2000s people saw it as a true alternative for pet care. Now, there are business owners who’ve been at it 10, 20, 25 years and are ready to get out, while newcomers are asking how to value these businesses. So, starting from the beginning, what’s the biggest mistake pet business owners make that makes their business hard to sell? David: Pet businesses are service businesses, like auto repair shops or salons, and the main mistake owners make is getting caught up working in the business instead of on it. They forget to build systems, policies, and procedures—the backbone that makes a business function without them. When a buyer looks at a business for sale, if they can’t easily see how everything fits together, they’ll feel unsure about managing it. Without clear systems, the only people who’ll buy are those who already know how to run that exact type of business, which limits your buyer pool. Bella: That makes sense. It’s like you have to corporatize your small business a bit so someone else can step in. I see many pet businesses—including my own when I started—where the brand revolves around the owner’s name. That’s hard to sell, right? David: Absolutely. If your business is named after you, it’s difficult for someone else to step in and be “you.” It limits scalability too. Bella can’t be everywhere. Changing that early helps if you ever plan to grow or sell. Bella: Great advice. So what can business owners do now to ensure they’re set up for success if they want to sell later? David: The key is to always keep your business in a “sellable” condition, just like you’d maintain your house. You don’t control when you’ll need to sell—burnout, divorce, relocation, poor health—only one reason out of five is retirement. Keeping your business sellable makes it easier to run and increases its value. For example, in one of my past businesses, I had a simple one-page job sheet to track work with clients. It had checklists, pricing, and customer sign-off. It kept employees accountable and ensured consistency. Without something like that, over time employees change how things are done, and your service quality drops. Systems like that protect your standards and make training easier. Bella: That’s a great example. It reminds me of consultations in pet sitting. Each one’s basically a sales call, and if you don’t have a system, the client experience varies. One of my clients even refused to book unless her favorite sitter was available just because she once brought her cat dollar-store catnip. That emotional connection was sweet but chaos for the business. We need consistency, like McDonald’s—same experience every time. David: Exactly. Buyers aren’t buying your job—they’re buying an investment. There are two kinds of buyers: financial buyers and strategic buyers. Financial buyers want a job that also gives them a return—they’ll work in the business. Strategic buyers are expanding—they buy to grow and may not work there. For example, one pet sitting business might buy another nearby one. Big corporations grow the same way—through acquisitions, not starting from scratch. Bella: I love that. Okay, so what mistakes do business owners make when they’re selling? David: The biggest one is overpricing. Owners think they can ask whatever they want, but business sales don’t work like art or houses. Buyers pay with the cash flow of the business itself. They’ll only pay a price that lets them recoup their investment in two to three years. If you overprice, serious buyers won’t even talk to you—they’ll think you’re unreasonable. Then you waste a year with tire-kickers who can’t close a deal, while real buyers move on. Bella: That’s such a good point. I went through that myself years ago. I learned what systems and processes I needed to make my business worth what I wanted. So for listeners—go meet a broker now, even if you’re not selling yet. Get their valuation and learn what to improve. Keep your business like your home—tidy and sellable. Tell me about the difference between using a broker and selling on your own. David: Funny enough, that’s what my book How to Sell My Own Business is about. The first half explains why you might use a broker and how to choose one. Commissions are high because businesses can take years to sell and brokers work without pay until the deal closes. But that also attracts some unqualified brokers who are just chasing commissions. The second half of the book covers how to sell on your own and where to get help. If you sell on your own, you’ll need help valuing the business, preparing an info package for buyers, advertising confidentially (very important!), and negotiating. Telling people publicly that your business is for sale can destroy it—clients may jump ship. I help sellers prepare, package, and privately market their businesses, like I did for a woman in California who sold her yoga studio. Bella: That’s awesome. So you charge for specific services, not commissions? David: Exactly. I charge per service—valuation, packaging, coaching. It’s like working with an accountant or attorney. It’s more stable for me and cheaper for clients. Brokers only get paid when you buy or sell, so they’re motivated to push deals through. I can tell buyers, “Don’t buy this—it’s a bad deal,” which brokers won’t do. Bella: That independence is huge. And emotionally, sellers sometimes need someone between them and the buyer. When I sold mine, I probably would’ve talked the buyer out of it because I couldn’t stop oversharing. A broker can control that emotional flow. David: Exactly. They keep emotions in check and the process on track. Bella: Before we go, tell us about your other books. David: Sure. All my books are on Amazon. Invest Local is about investing in small businesses. Franchise Warnings explains the risks of franchise models. Credit Card Advantage shows how to use credit cards strategically for cash flow and marketing. 21 Stupid Things People Do When Trying to Buy a Business and 12 Things to Do Before You Consider Selling Your Business are also available online. Bella: Awesome. Thank you so much, David. This was incredibly valuable. Thanks for joining another episode of Bella in Your Business. Subscribe on iTunes or Stitcher, and always remember—keep jumping. For more information, free articles, and coaching sessions, go to jumpconsulting.net. And remember, Bella’s got your chute.