Build a Business Worth Buying

On this episode of Build a Business Worth Buying, host Aaron Alpeter sits down eith the powerhouse co-founders behind Athena Advisory Collective. Unlike the typical VC-backed founder stories, Cristy and Aggie specialize in helping female founders of agencies, service firms, and bootstrapped businesses build and exit on their own terms.

You'll hear why non-VC paths can be more sustainable—and potentially more lucrative—than the venture route, and learn exactly what makes a service business truly valuable and sellable. The conversation dives deep into topics like securing recurring revenue, designing bulletproof contracts, getting the founder out of day-to-day operations, and creating a turn-key business ready for a smooth exit. Cristy and Aggie also share candid insights on supporting women founders, the psychological hurdles around selling a “passion project,” and the importance of knowing your numbers.

What is Build a Business Worth Buying?

Build a Business Worth Buying brings you candid conversations with industry leaders, M&A experts, and successful founders. Learn advanced strategies to scale, optimize, and prepare your business for an acquisition—because building a business worth buying starts with smart decisions today.

Aaron Alpeter:

Welcome to Build a Business Worth Buying, the podcast where seasoned entrepreneurs, m and a experts, and world class operators share behind the scenes stories of building, scaling, and selling remarkable businesses. I'm your host, Aaron Altier. And every week, I sit down with people shaping the world of acquisitions, founders who've cashed out, buyers with bold strategies, and advisers who help make deals happen. This is not a podcast for beginners. It's for those who know the grind and want actual insights to make their next big move.

Aaron Alpeter:

Get ready to take notes, rethink your strategy, and hear untold stories of what it takes to build a business worth buying. Today, we've got double feature. I'm joined by Christy O'Connor and Aggie Shuzinski. They're the cofounders of Athena Advisory Collective, and they work primarily with female founders to help them build and exit businesses on their own terms. Unlike a lot of the venture backed stories that we typically talk about, Athena's focus is on agencies, service firms, and bootstrap businesses.

Aaron Alpeter:

These are companies that may not fit the VC mold but represent real value and very strong x potential. Together, Christie and Aggie bring a blend of entrepreneurial experience, operational expertise, and storytelling savvy. Aggie and Christie also host the Badass Women in Business podcast, which highlights women founders. I'm excited to dig into what they're seeing in the market, how they guide founders toward exits, and why they believe the non VC path is just as powerful, if not more sustainable than the venture side. So Christy and Aggie, thank you so much for being on Build A Business Worth Buying.

Speaker 2:

Thanks for having us. Thanks for having us.

Aaron Alpeter:

I want to kind of dive in and talk about valuing businesses outside the traditional VC metric. You guys focus on service businesses and these are very different from the traditional brands or VC backed companies that we'll talk about on on build business worth buying. And I'm curious, when you think about an agency or a consultancy or some other service entity, what is it that people can actually buy? It feels like so much of it is selling, you know, time for money and and how do you scale it? How how do you find value and and what's there?

Speaker 2:

It's a great question. Because a lot of times, it depends on what kind of, service industry you're in. When you get into things like law, CPA firms, those of those things of those sorts, and even group therapy practices. Typically, have to have someone who has a specific designation to be able to take those over. And so a lot of times you're looking at creating a sale within the organization.

Speaker 2:

That's why they typically have deep lines of partnerships so that the brand always lives on. And so that's that's something that's a big differentiator, I think. What I think a lot of people don't put the focus on is monthly reoccurring revenue or having contracts in place. That is what really helps increase the enterprise value of a business. Because if I'm coming in off the streets and I wanna purchase that business, I wanna know there's a guaranteed pipeline for me so that I don't have to start from ground zero and build up.

Speaker 2:

There's no value in that. I might as well go start my own service firm. So I think that's one of the big things that a lot of people don't focus on, and it's a way to improve their enterprise value.

Aaron Alpeter:

Gotcha. So just to kinda repeat back what I'm hearing, if you're based on project to project, effectively, it's just relationships at that point, and that's really hard to buy is those relationships. And so it really is about having those those those contracts. That that's really what people are buying when they're looking at a service business.

Speaker 2:

Yes. I would say so.

Speaker 3:

I would follow that up by saying that one of the things that really increases that enterprise value as well and makes a business buy a viable is that the owner is out of the day to day. Because when you're thinking from a buyer's perspective about acquiring a business, that business needs to be turnkey. And you do not want a business owner that owns all of the relationships that owns all of the systems without processes being outlined properly. We've recently actually heard of a interesting story. A woman bought an accounting firm for quite a bit of money.

Speaker 3:

And fast forward twelve months, the senior accountant who was on staff basically left, started her own accounting firm and took half of the clients. So that was brought brought to our attention by one of our clients who knew of that person. And so my first question was, where are the contracts? As Christie said, client contracts, employment contract, but also clawbacks. And none of that was in existence because it was a basically a handshake deal that ended up going really, really bad.

Speaker 3:

So now you have an owner who bought a great asset. I mean, there was enough of an MRR, great track record of revenue, but now she's left with basically half the asset because the clients have gone. So the focus now is, does she rebuild by acquiring new clients, increasing her pricing, or there's no grounds for litigation at this point in time because there weren't any contracts in place.

Aaron Alpeter:

Yeah. So that's a really good example. If we think about, you know, that accounting company, lot of these things are going to be month to month. Right? So how do you how do you convert that into an actual contract that says, you know, thou shall not leave for x many years?

Speaker 3:

That's a great question as well. And it has to do with the value of the service that you provide. Very few businesses can solve a problem in thirty days.

Aaron Alpeter:

Right.

Speaker 3:

The majority of relationships and partnerships that you form with, whether it's a CPA, a law firm, a consultancy, or any other service based businesses. Christy mentioned mental health because that's a big niche that we serve. It is the continuancy of service. So basically you create a value package that takes the client on a journey with you, not as a service provider, but as a partnership. And that also creates that value because then that contract and that partnership is you can say amortized, right, over the course of the year or two years, if that's how you want to look at it.

Speaker 3:

And it also helps with cash flow because now if you're an attorney that's offering a subscription service or a CPA that's offering or bookkeeper that's offering a subscription service, then your client can plan their cash flow. They know exactly what's coming out of their bank account on a regular basis, but it also guarantees revenue for the entire year, which allows for less stress and also better cash flow management.

Aaron Alpeter:

Yeah. I mean, if if I were to to look at this and say, okay, I'm I'm I'm a bookkeeper or consultant and things like that. And if I have retainers, is that good enough? Or or is it something where it's like, you need to have a contract that says you're gonna have this retainer for some period of time.

Speaker 2:

It's the period of time. That is absolutely essential.

Aaron Alpeter:

Gotcha. And what do you guys typically recommend for, companies that are looking at this?

Speaker 3:

At least six months, I would say. But,

Aaron Alpeter:

Kelsey They do six months, and then they renew six months after that and those sorts of things.

Speaker 2:

Yeah. I was gonna say annual is ideal. Right? Especially if you are prepping to sell your business. Because once again, if it's six months, there's a lot more risk and you don't know when you're gonna be actually selling the business.

Speaker 2:

And so if you have to go and focus on building up your clients to make sure you keep that profitability in the business, then you start running into some challenges and your focus shifts.

Aaron Alpeter:

Makes a ton of sense. When when you think about assessing these businesses and making them more viable, how do you what do you focus on? Right? Do you focus first on the systems, on the client diversification, the brand equity, the team structure? I mean, there's so many things that you can do.

Aaron Alpeter:

So what what levers are the most poignant for you when you come in and assess a service company?

Speaker 2:

Number one, I'm gonna take some words and say cool kids know their numbers. So making sure that their financials are in great order. That is the number one thing that most people coming in. Unfortunately, a lot of people buying businesses are first time buyers, and they don't even think to understand how to dissect, in essence, profit and loss statement, balance sheet, all those different areas that really help you identify the actual value of the business. So having your financials in alignment is probably the first place that you want to ensure is completely aligned.

Aaron Alpeter:

And and just to build on that, is is it is it enough just to have a p and l statement done by an accounting firm, or is it you know, they really need to understand to be planning out their cash flow to the day? Like, what's the level of granularity that, you know, a a $3,000,000 business needs to be

Speaker 3:

I mean, it really depends on what their financials look like. If we're in dire situation and we're basically either throwing cash out the door or leaking cash without understanding where that cash is going, then yeah, we have to plan on a day to day and we have to start looking at our balances and also analyzing where is all of this going. So we often create a twelve month cash flow projection that ties into the P and L so that our clients can see what's happening at least on a monthly basis. But we tend to look at it bimonthly or even weekly depending on how often we meet with our clients, especially if they're in a tough situation. But also, think that every clarity story when it comes to financial has to start with a vision that takes you either five years or three years from where you are today so you can walk it backwards because it allows you to really figure out, are my financials healthy?

Speaker 3:

Do I have a plan on taking them further and what it is that I need to reinvest in my business. Can I hire people? Can I invest in technology? Can I buy capital? I mean, there is there are so many things that you can do once you know your numbers.

Aaron Alpeter:

That's great. And Christy, I cut you off. You dropping some really good gems here. First thing is cool kids know their numbers. What are the other levers that people should look at?

Speaker 2:

You know, think one, as Aggie just kind of mentioned in the story she shared, is ensuring your culture and your human capital is in alignment. Really taking the time. If you have key employees, you need to make sure they are part of that sale and that they are incentivized to stay and that there's contracts in place to ensure that that key employee does not affect the business once it has turned over into different hands. Culture makes a huge difference as well depending on what type of business you're buying. My background was in buying failing businesses.

Speaker 2:

And so with that, I had to change my entire team from the moment I walked in the door because the culture was not right to achieve what we needed to in the organization. And that was the quickest, fastest way to make a change. So if you have a really strong culture, your human capital is bought into the brand, the business, the services that you do, that can actually, really accelerate the value of the business. That's helpful. And obviously, we look at all the different levers.

Speaker 2:

Right? What does your sales pipeline look like? How are your marketing efforts? What do you have in a sense of a recruiting process? So the other thing is is I personally was in the franchising world when I had my businesses.

Speaker 2:

But with that, we had, franchise brand that was not fully developed. So even though a franchise is supposed to provide you with all your standard operating procedures and how to do things, I was creating those from scratch. If you do not have basically a standard operating procedure playbook for every single position that me off the street could come in and do that that job, that work really effectively, that decreases the enterprise value of your business because most people want to come in and as Aggie said earlier, you want it to be a turnkey operation.

Aaron Alpeter:

Yeah. And so, you know, people throw away throw around SOPs quite a bit and it's just like, oh, we have that word doc and we look at it every two years. I get the sense that's not what you mean. How do you, how do you make a really good SOP that people actually use?

Speaker 2:

There is, I wish it was there when I had my businesses, but leveraging technology is going to be huge. There's three different things that I can really think of. One is it's either Tango or ScribeHow. These are screen recording SOP documentation for you. So you literally just push record and it's gonna record everything you're doing and that becomes a living breathing document for the operations.

Speaker 2:

Number two, Loom video recordings, making sure that you're leveraging that as well. You have to understand that people learn in many different ways. Some can be visual, auditory, any of those things. So you need to make sure you have multiple layers to your standard operating procedures because everybody learns in a different way. And then the last one is leveraging any of these amazing note taking AI devices.

Speaker 2:

Like, we utilize Fathom in our business. It records everything, but from that, you can take those transcripts and you can throw it into OpenAI ChatGPT, and you can have something created that's directly a result of the training that you potentially just did with that employee. So there's a lot of different tools, and it's just not a Word doc. To your point as well, having a place where everything lives in a system. So if you are utilizing Microsoft, having a one point area that everything lives and exists in SharePoint, that's a great way.

Speaker 2:

It's basically an intranet for your business. So I'm not clicking into 10 different folders to find that SOP. It allows it to be always updated and an easy resource for employees to access.

Aaron Alpeter:

Yeah. One of the things I loved about the conversation that we had before this was, you know, your your experience with these turnarounds and these franchise. I'd love for you to share a little bit more about what that was like. And I guess the question I have is when you go into a turnaround, you know, there's so many different aspects of a business. And so which parts were the most broken, when you looked at it?

Aaron Alpeter:

Was it they couldn't acquire customers or they didn't keep track of their cash or, you know, they were they were losing talent? Like, how do you go through and assess what is actually broken? And then where do you actually put your effort into to to actually turn around?

Speaker 2:

It's a great question. So for me, again, it really started on the human side, number one. Number two, a lot of people who purchase franchises have never been business owners in the past. So I was actually in the fitness industry. And typically you run classes in the morning and you run classes in the evening.

Speaker 2:

So these owners were keeping the studios closed between ten and 4PM. You're missing walk by traffic, you're missing the phone calls that are coming in. There's so many opportunities that are being missed. So number one, I would keep my business open from 5AM in the morning till 08:00 at night and always have staff there. Number two is marketing Especially in the franchise space, they think, well they're taking 8% of my top line revenue, I should have great marketing.

Speaker 2:

No, that really goes to the franchise and it's less about you on an individual's level. So you still need to do local ad spend if you're trying to look at a volume play. So being willing to invest at least $2,500 a month depending on your market and where you're at into actual ads and marketing is another big factor. And then three is finding the right people for the right speed, right? It can be really challenging to make sure you have the right leaders, but once you have those right leaders and you empower them that, hey, in essence, this is your business, I'm giving it to you to run.

Speaker 2:

And I really created that ownership with my managers, then the business starts kind of falling on its own. But those were kind of the biggest areas was getting the teams in place was probably the hardest. I learned the hard way. I tried to keep on a lot of the staff in the beginning and just realized that when I'm asking them to follow a sales process, they were completely resistant because they didn't have

Aaron Alpeter:

that

Speaker 2:

as their background and experience and they weren't willing to adapt. So for me to get the buy in I had to typically thirty to forty five days before I would take over a new location I would start my recruiting. The day I took over the business I would have my new team come in and we would spend three days just training on what the expectations are of the business. And then key performance indicators, right? I'm a big believer in creating scorecards, having them know their numbers every single week, and that really creates the accountability and allows you to pivot quicker, quicker and shift when things aren't going right versus at the end of the month, if you're just reflecting on what the past month was, you don't have the opportunity to make the changes.

Aaron Alpeter:

Yeah. Know Aggie, I want to throw it back over to you because you guys talked about having kind of this aspirational goal that's three to five years out. What makes the goal actually useful? It's easy for me to say, Oh, I'd love to take my business from 3,000,000 to $30,000,000 in five years. That sounds really nice to me.

Aaron Alpeter:

But how do you how do you help your clients kind of understand, okay, if you really wanna get to 30,000,000, here's what you have to break down and here's how it's different from a services company versus a traditional brand.

Speaker 3:

That's a great example that you just gave because if somebody tells me we're starting the relationship at a $3,000,000 ARR or annual recurring revenue And that owner says, I want to sell and I want to sell in five years and my company be worth $100,000,000 Sounds pretty good. Yeah, that sounds amazing. And in SaaS, probably plausible. In the service space, unless you have a SaaS model that you want to sell with that professional service firm, very unlikely to make happen in five years unless you're in hyper growth and you start hiring, I mean, really, really fast. And I think that the plan is also allowing people like Christy and I to figure out, is this even realistic?

Speaker 3:

And realign the goal with the potential seller or the business owner at that point in time to let them know it's going to be difficult unless you have the ability to put massive amounts of cash into your company and diversify. So one of the things that we didn't talk about is like about increasing that value driver in sales specifically is diversifying your client pool, you can't rely just on one client, you have to have multiple contracts that last multiple years, or at least one year at a time. So, like going back to the planning, I think that if the road is too far fetched, then we are not going to be able to set really effective initiatives and hit them because you have milestones in a business and those milestones happen within a timeline. So that's the value of planning. I don't think that it's people that plan ten years ahead, that's a little bit too much.

Speaker 3:

Mean, at that point in time, you might as well, know, get a magic wand and make a wish. I think that based on patterns and business history, you can plan as far out as three years ahead. Five years starts again to becoming a little bit of a guessing game, but at least there is a rationale because you have the first three years to actually push the boundaries and figure out how to work it backwards. So if you start at the three year mark, and then you figure out what do I need to do year two to achieve year three, and you set your initiatives, and then you work it backwards to the next twelve months, and now we get to build that full roadmap, that is realistic, is based on not only data, so numbers data, key performance indicators planned ahead, but also set action plans that we need to take and implement throughout the year in order to get to the to the goal.

Aaron Alpeter:

Yeah, that that makes sense. I mean, I I'm used to products and brands and stuff like that. So it's it's kind of easy. It's like, I wanna go here. This is how many widgets I need to make.

Aaron Alpeter:

And you go out and do that. It's different in services because it It is. It's kind of a question of it's not widgets I'm making, it's hours I'm selling or contracts I have or things like that. And so my question for you is how do you how do you help your clients understand how much they should be leaning into hiring and just saying, hey, we're gonna be really optimistic. We're gonna hire for the business we hope we're gonna get versus leaning back and saying, hey, you should just be stressed out for a bit because you've got more business you can take on.

Aaron Alpeter:

It's always, you know, pancakes and syrup. And if you have too many than than one, it's not really a good fit. And so I'm just curious. How do you guys solve that from a service point of view?

Speaker 3:

Well, I think Christy said it earlier. It starts with the numbers. Right? Because you have triggers along the way that are going to be indicators for you to know when can I hire? But another big identifier or trigger is capacity.

Speaker 3:

Is what do you have the capacity to do if you're a solopreneur by yourself? And how many clients can you carry at your current price point? And then we have a discussion about price. Are you undervaluing yourself? Because sometimes scaling is just about increasing the price to match your worth and your value.

Speaker 3:

And especially in the women owned business world, that's a big struggle. Guys are a lot more maverick about pricing themselves. They're like, this feels good. I'm going to go do it. Whereas women have a tendency to start really, really low and then progressively increase as they see the demand increase, and sometimes they don't even increase it.

Speaker 3:

So for us to shift that is a really easy flex because we just go in, reidentify the ideal client persona, and increase the pricing and function of that persona because they see the value in the service and it's in need that that specific ICP. Yeah. So once you once you have a pattern and you figure out your capacity and you want to grow, then it gives you kind of triggers of when you need to hire. And that's something that we plan on as well with with with our clients in determining, do you want to lead a team? Number one, if you already have a team, who are the people that you actually need to fill up some functions?

Speaker 3:

Because again, one of the errors that business owners make is that if they have a gap in sales, they'll automatically go and hire somebody that is like a big wig at a sales company, you know, at a large corporation that has closed millions of dollars, then they bring them back into this small business. And that person has no resources. So they don't know how to hunt, they don't know how to identify leads, all they know is to close. But if nobody's bringing them the people to close, then they won't be able to close. So it's also we use an accountability chart rather than an org chart in order to figure out the essential functions and also which ones are most critical for the business and filling those first before going a wall on hiring.

Aaron Alpeter:

That's great. Yeah. I think you bring up a good point because, you know, there is a sweet spot for some businesses. Not every services business needs to be a billion dollars in order for it to be interesting requirement. In fact, you know, I know several folks that, you know, they're million bucks, but most of that's profit and they're just thrilled with that.

Aaron Alpeter:

You know, I think one of the most interesting things about Athena is your focus on women. And so I want to kinda take the conversation there. When you guys decided to come together and to to form Athena Advisor Collective, how did you identify that female founders in particular of non VC businesses were underserved and needed attention additional attention?

Speaker 2:

Well, I will take this one, but I'm gonna have Aggie tell me the stat of how many women owned businesses actually get funded. Is it 2%?

Speaker 3:

Less than 2%. No, it was it's 2.2% as of the end of last year.

Speaker 2:

Right. So that's number one. Right? They have a hard time getting in front of the right audience if they did want to have that that outside partner. So that's why we come in as the non equity business partner, so

Speaker 3:

that

Speaker 2:

we can help them. I would say the other thing is, Aggie already kind of hinted towards this, is most women start their businesses a lot of times out of passion or it's their area or knowledge of expertise, and they don't have the right value on the services or products that they're offering. So a lot of times it's about coaching them on their confidence. It's mindset. It's those pieces that are really, really important.

Speaker 2:

Men are great at faking it until you make it, Right? They can go get funding off of a back of a napkin. Here's what I'm gonna go do. Someone will believe in it, they'll give it to them. I hate saying it, but as women, we do have to prove ourselves a little bit more still today in the business realm.

Speaker 2:

And so we help them understand the value that they bring, their business brings, and how they can present and speak about it in a way that gets them the attention and attraction that they need. So a lot of the times they are individual founders and they need that reflection. They need what we call their personal board of advisors, right? They need the people and the team members around them that can lift them up and give them the skill set that they may not automatically have as being a business owner that maybe started it on passion. They're now worth $3,000,000 And they're like, what did I build?

Speaker 2:

I don't even know how I got here. And how do I make this sustainable? So it's just that I think that the female founders just need a lot more hand holding and attention, and that sense of community and support.

Speaker 3:

That's great. I think there's a stat that's pretty telling, that says that when humans apply for jobs, if the applicant is a woman, she will need to match 80% of the criteria in the job description, whereas men feel like 30 to 40% is enough to apply. And we recently attended this panel that featured VC firms and impact investment firms. And one of the biggest takeaways was that when women go in front of a VC firm, they undervalue their offering, whereas men will use projection based on their best and most likely scenario to get that funding when women actually underscore their projections by about 10 to 20%. And because ultimately, I think the risk is there and and women are naturally more risk averse in many different scenarios.

Aaron Alpeter:

And I

Speaker 3:

think that entrepreneurship is is one of them because we're building a nest. We want the money to be able to take care of our family. We want the money to be able to have a better life. And so and we're not always in it to get rich.

Aaron Alpeter:

Yeah. And and I think, Aggie, what you're saying definitely resonates with me with with some of the the female founders I worked with. And, Christy, you mentioned how a lot of female founders will start a project out of passion. And it's something that is, you know, it it just had to exist and that's why they did it. Do you find that that makes it more difficult for them to to exit, to build something that they want to sell?

Aaron Alpeter:

I mean, they may want the outcome of selling, but, you know, when it comes to being able to step away and say, you know what? I'm okay with someone else taking this in a different direction or doing something different. Do you find that that's a a psychological barrier that you're working through more with women than you would with maybe men?

Speaker 2:

100%. You know, what I find is anyone selling a business, first of all, nobody wants to hear their baby's ugly. And that's exactly what they feel. Right? To me, I look at a business as an asset.

Speaker 2:

And I want women to change that mindset of this is my baby to this is an asset. So if your only option is to be acquired by private equity or something of that sorts where your brand, your name may not exist six months from now, women have a really hard time with that because they put their identity into building their business and they want to see that name, that brand, that legacy live on. And so it's really, again, it's about shifting that mindset and saying what's really important to you. Do you want to be doing this business for another three to five years and just shut the doors because you're not willing to put some of these things that are personal to the side? And everyone has their own opportunity to do as they wish.

Speaker 2:

But I see that time and time again, that I want the name to live on. I want my staff to stay intact. And that's not always the best opportunity for you to get the value of the business that you want.

Aaron Alpeter:

Yeah, That's that's really I think that that applies to not just women. I say that, you know, with men and and yeah. That that definitely resonates with me. I guess, you know, there's an element here where I I feel like if you start something as a passion project, you may start to think of your team as a family. Right?

Aaron Alpeter:

Maybe you've got family working in the business or things like that. And that can be a very difficult thing as well as you're like, no, this is an asset. It needs to be different. So I guess how do you help people change that mindset or or coach them in terms of, hey, yeah, you may really like all the people that are here, but, you know, this is a thing. This is not a living organism.

Aaron Alpeter:

It is a thing. You know, it has a definitive beginning and end, and, you know, you you cherish the time that you're able to work together and you're able to be a part of it, but you have to be okay letting it go. I mean, do you get people to that point when it's it's such a personal thing?

Speaker 3:

Happens to the best of us. I mean, I think collectively and individually, it's happened to Christian, myself too. We get too close and we see people who are going to be bringing a tremendous amount of value and the conversation we have with our clients all the time. I mean, it's literally I'm not even exaggerating, because I think in 100% of the firms that we're working with who have employees, there is a story about someone who is underperforming and we're not letting them go because we like them. Because it is going to shift the culture because the team is going to react negatively to this person leaving because they like them and people have made friends And at the end of the day, it's not personal, it's business.

Speaker 3:

And I know it sounds super simple, but that is the notion that we need to repeat over and over again. A 100% of the time, fast forward two weeks after they finally made the decision to let someone go, is, oh my god, I wish I had done that sooner. And sometimes it takes six months for us to finally coach someone to the point where it is they're scared to have difficult conversation. Who likes confrontation? I mean, nobody, even people who are naturally confrontational dislike confrontation because you don't want to mirror yourself in this other person's eye who's looking at you and who's going to be judging you for being harsh, for not being nice, for being unreasonable, and not setting your expectations properly.

Speaker 3:

But I think that at the end of the day, for founders who are coming in with small teams who are just now starting to hire seriously, I think setting expectations from the very beginning and keeping, you know, half an arm's length between yourself and the employee and continuing to keep them accountable, it is much easier to get that harsh conversation and those expectations out of the way versus opening the door to whatever comes comes, and then letting those bad habits get in the way and then setting expectations on the back end because now you look like someone who's not very nice in terms of leadership. So when you choose to lead a team because it is a choice, you can start a company and run it by yourself. But once you wanna grow it and scale it and you start bringing people into your team, you have to make the conscious decision that you need to lead them. You are not their mom or dad, and your company is can feel like a family, but at the end, it is not a family. Because it's transactional.

Speaker 3:

Families are not transactional. Families are based on feelings. They're based on bloodlines. They're based on friendships. You have extended families, but it shouldn't be based on on a transaction.

Speaker 3:

You're not paying somebody to do something for you In business, that's what happens.

Aaron Alpeter:

Yeah. I mean, you're you're spouting all sorts of truth here. I I love it. I mean, really what you're talking about is the founder themselves has to be a little bit disassociated with their business. It can't be their identity.

Aaron Alpeter:

It it you know, they have to be okay being like, yep. That was work, you know. And if you're taking your work home with you and if you're, you know, this is all you live and drink about and your identity is wrapped into it, It's really difficult to do those other things. And so, you know, it's it's it's really because I think that some people may say, oh, if I have employees that are just hitting the clock, it's nine to five that's there. You know, that's kind of what people would say they don't want.

Aaron Alpeter:

But to some extent, you want that a little bit. Maybe it's not nine to five, maybe it's six to six. Right? You know, maybe that's kind of the engagement you want, but you you need to have people who can disengage a little bit, enjoy their weekends, enjoy their evenings. You as the business owner need to be able to do that as well Because kind of what you're saying is, you know, what is the purpose of it?

Aaron Alpeter:

Is this a club where we are sharing, you know, revenue and and, you know, having a good time, which which is fine. Or is this something that's different that, you know, people will come, people will go and, you know, this is gonna live on in a different way.

Speaker 2:

I think the other piece too to just add to that is that employees don't have the burden of ownership that you have as the founder. And they will never know what it's like to be in your shoes and to have to make these hard decisions. As Aggie said, we do have a niche in group therapy practices. They're therapists by nature, right? And so it makes it very, very challenging for them to be leaders as well.

Speaker 2:

But what I find is really interesting is employees go, Wow, I'm not getting paid that much. I can go and set up a solo shop and I'll be making twice as much. Well, truthfully, typically they're working twenty hours live with clients and getting paid a full time salary. Now you go and become a solopreneur, you now have billing, invoicing, insurance verification, insurance for your business, you have all this overhead. And not to mention the time.

Speaker 2:

So money is time. You have to choose what you want. And I think employees don't understand that and I really do think it's important for employers to kind of outline what are the benefits of working for me or with me versus going out on your own. Because it tells a really good story and it makes them think twice sometimes about, oh, I didn't realize all those things are expenses that I would have to take on myself, which is gonna cut into your bottom line.

Aaron Alpeter:

Well said. Aggie, if you were to meet a founder and they say, Hey, I've got this goal. It's not five years, it's two to three years, those sorts of things. What would you say is their playbook that you would give them in terms of how they get ready for a buyer?

Speaker 3:

Great question. So I think we've mentioned a few of those pieces already. Number one, it's let's look at your financials. And part of that is you have to learn how to understand them so that you're not necessarily relying on your bookkeeper, your CPA or your CFO, to just give you reports that you do not understand. We meet with founders who, when we tell them instead of paying yourself this salary, you have a bunch of equity that has been accumulated from the back end of your business, and that equity can be drawn can be drawn upon so that you can increase your EBITDA and basically tell a better story financially.

Speaker 3:

A lot of them don't understand or don't know that they could have done that a long time ago. So the financials is number one.

Aaron Alpeter:

Is that basically like using debt? Is that like the idea?

Speaker 3:

Not using debt but like any profit that you've made in previous years that has been accruing your equity, can draw from. Oh, yes. Don't draw from this year, but draw from previous years. As long as that owner's equity is not in the negative or the retained earnings are not going into the negative, you have that pool of money that you can pull from. So if you ran a balance sheet for December 2024 and you looked at your retained earnings, technically, you can draw that amount of money.

Speaker 3:

Obviously, we would never say, hey, go draw half a million dollars, but if you're paying yourself a salary of 200 k, you could technically reduce that salary to $1.20 or $1.50 and draw the additional 80 or 50 out of your pool of money as long as the business has a plan to continue being profitable. So financials are number one. Number two, I would look at where understanding where your revenue comes from, understanding which service offering or product offering you have that is has the highest margin and focusing on that one because that's your bread and butter. Then looking at your expenses and figuring out like what are you investing in, your people, your technology, or your tech stack, and also all of those other things including your debt level so that you can plan better. And then last but not least, which, you know, is planning.

Speaker 3:

Planning ahead and making sure that you have your year mapped into a yearly goal, but also you have your quarterly rocks so you can look back and celebrate the small wins, your monthly initiatives to support those quarterly rocks, and your weekly actions. Christy mentioned the scorecards. We're big fans of looking at scorecards on a weekly basis because it allows you to be proactive. So if you want to increase your enterprise value and be ready to sell twelve to twenty four months from today, You have to have all of those things that we talked about ready such as SOPs, you know, your your people contracts, your client contracts, all of this is really important. But really understanding the health of your business because health impacts your value drivers and it impacts your enterprise value.

Speaker 3:

So we have a health and value assessment that we're using when we are bringing clients on or even if we're talking to prospect, it's available for anybody to take on our website. It doesn't only look at your enterprise value, it factors in the health of your business. So do you have a financial plan? Do you have a sales plan? Do you have a leadership plan?

Speaker 3:

Do you have a recruiting plan? Do you have an ops plan? And do you have a marketing plan? And all of this, it's like I think five twenty questions. And you rate yourself on those questions and that comes up with a health score that is basically embedded into that value.

Speaker 3:

So just taking care of the health of your business can help increase the enterprise value. Because that's what buyers are looking for. Again, they're looking for that turnkey solution, healthy businesses without any blind spots embedded into them.

Aaron Alpeter:

Yeah, that makes a lot of sense. Do you find that most of your clients who you're having sorts of conversations, is it, hey, guys, you gotta cut your services. You gotta reduce what you're doing and simplify, simplify, simplify. Is that a general theme?

Speaker 3:

Not always. I would say that some people have it pretty dialed in what they're really, really good at. What we're we're making sure that they're not doing is over diversifying because and I'll give you some examples of let's take HR company, so you know, small team offering outsourced HR services. At some point in time, they realized that payroll was just not in their wheelhouse. That's not what they wanted to do.

Speaker 3:

So they just cut that from their services and outsource it to a strategic partner. It's still part of their offering, but they're just not doing it. And that's also if you're looking at strategic partnerships. People look at mergers and acquisition, but they're not always looking at strategic partnerships of how to expand their footprint without acquiring or without merging with another firm. You can have those strategic partners that you are basically offshooting to your clients either under your umbrella, so wildly white label services or just basically call it out of, like, you'll get this from us, but you'll get that from this other firm that's here that we trust and that's our partner in that.

Speaker 3:

And we do that a lot too, because that's the way sometimes that you scale a service without having to reinvent the wheel. So we've had we've had a lot of those conversations, and we've had conversations of adjust your service because it was dysfunctionally offered to the market or didn't have the right price tag, didn't have the right value proposition behind it. And so sometimes, you know, it's it's the difference between being in a pedal low in a middle of a lake and actually having a boat with a motor in it or an engine in it. It's you're you're cycling on the water and against current, and it takes you a while to get out of it. And that's how you get really, really tired as a business owner is doing the same thing over and over again, not seeing the results.

Speaker 3:

And we we've had a lot of great stories of just pivoting that a little bit and getting that traction and getting businesses to 10 x over the course, their top line revenue over the course of two years because they basically reinvented the way that they were offering their core service by doing it more efficiently and pricing it the right way.

Aaron Alpeter:

That's really interesting. You know, a lot of times we'll talk to founders and again, this may be different for services versus brands, but as they are working their way into that exit window, there'll be this push to dial up their thought leadership, to do more brand storytelling, to try to make sure that, you know, when the acquirers are out looking that they're being noticed or that they're seen as as maybe big being bigger than they are. Do you recommend that that founders spend more time doing thought leadership or brand storytelling as part of that exit prep? I

Speaker 2:

believe it's important when it comes to the point that you have an LOI or an NDA on the table so that you do have a really effective story to tell. People do, like you said, from a brand perspective, it's all about the collateral, the followings, how many people approve of what it is you're selling if it's a product based business. Right? Same thing with service. I think another thing that a lot of people need to recognize too is your reputation, I think, is even more important than your storytelling.

Speaker 2:

And your reputation comes through your reviews, your testimonials, and those kind of things. I think that that is extremely important because it gives you something to stand on and behind as well. So I think it's important, but I don't know that it's that it needs to be above and beyond and tons of extra time is invested into it. If you're at a position that you wanna sell, you should already be seen as that thought leader and already have the stories.

Aaron Alpeter:

For sure. What are some of the I mean, certainly, if if you're trying to start six months before you you expect a deal to go through, it's a little bit late there. What are some other mistakes you see a lot of founders make when they're preparing to sell?

Speaker 2:

Number one, they think their business is worth more than what it is. I don't know if that's that's something in prep, but if someone has been told by a broker, by somebody, your business could be worth this, then they get stuck in their minds, which actually puts blinders on and it allows and it forces them to miss opportunities because they go, my business, I was told it's worth 2,500,000.0. And the offer might be one. Right? So and that that will kill deals.

Speaker 2:

It will kill deals if you don't have the reality of what is the market. And there's always, yes, you can do comps, you can do any of that assessment, but at the end of the day, your business is only worth what the buyer is willing to pay. And that is something that people don't always understand, and I think that's really important. So overvaluing their business is a huge mistake, number one. Number two, not getting yourself out of the day to day.

Speaker 2:

If I'm looking at a business to buy, I wanna see semi absentee owner. I wanna see something along those lines that allows me to go, okay, cool. They have enough revenue that they can hire a badass operator and allow them to really control the business, and they can still take a profit at the end of the day. Those are things that are really important, but people hold on to the value that they bring to their own business, and they're still working forty, fifty hours a week in the business when they wanna go sell it. It does not make it attractive on any level.

Speaker 2:

Other mistakes founders make is it can go either way. Telling your team too early that you're looking to sell, Right? That that can backfire. You think I want everyone's gonna be as excited as you. They're not.

Speaker 2:

Or not telling them soon enough. So, you know, when I did my takeovers, I let the business owners choose how they wanted to let them know that they were no longer owners. A lot of times, it would be they would show up, I would show up with them that day, and they would say, we sold our business. Here's your new owner and walk out. That is not the way to do it.

Speaker 2:

Yeah.

Speaker 3:

That's

Speaker 2:

tough. I think it's a really challenging way. But for me, knowing that they were failing businesses, I was okay with that because I was like, 90% of you are gonna be gone tomorrow anyway. Hate saying it, but it's the truth. So being transparent but finding the right time when to communicate to your team, those key employees that you feel are essential to the part of the cell and that you're going to want to bring those contracts in for them so that you have that guarantee they're gonna stay there.

Speaker 2:

Another thing that I think founders make a mistake when they think about selling their business is that it can be done in six months. It can be done in three months. Like, it takes time. And if you or the buyer is actually doing their due diligence, you would want them to take time. You want to, in essence, date that person for three to six months before you actually say, okay.

Speaker 2:

This is gonna be a good deal. From a buyer's perspective, it really gives you the confidence that you're buying an asset because you're now understanding the culture, you're understanding the owner, you're understanding all these things. And so I think that it's important for them to recognize that as well.

Speaker 3:

I would add one more and it's not willing to be ready to exit. Because at the end of the day, if you're looking at the five D's of succession succession planning is a is also a part of our business, whether it is a key personnel taking over the business or an air taking over the business. I mean, at the end of the day, we've seen probably everything in the last four or five years, we've been serving business owners in our capacity. We've seen death. We've seen disability.

Speaker 3:

We've seen divorces. We've seen disagreements between business partners, between family members, and we've seen a lot of distress because the owner is at one point in time being like, I just want to give it all up. And what do you do if you're not exit ready? And this is one of the misconception and we we speak to a lot of business owners who are like, oh, I'm not ready for you guys. Because I'm not ready to exit in the next twelve months or even in the next two years.

Speaker 3:

But how do you know? Yeah. If you're not taking the steps, we're not selling you. I mean, that's not our business model. We do not sell business.

Speaker 3:

We do not sell businesses. We help them to be ready if something happens. And that something could be literally anything. And it doesn't have to be you dying as a business owner that puts your business in jeopardy. But if a family member passes or is sick, you have to go take care of them.

Speaker 3:

We spoke to a woman yesterday who basically had this amazing idea, great product, hard launch, was successful and that had to put a full stop to it because both of her parents got sick. And so she had to take a sabbatical to go take care of them. Not only did she give pause on that business, but as a physician, she also had to give up her practice. And, I mean, looking back, this is hundreds of thousands of dollars Wow. Lost over time because she didn't have anybody to take over what she was doing before all of, pardon my French, shit hits a fan.

Aaron Alpeter:

Yeah. Well, Christy, Aggie, this has been amazing. I I I appreciate you guys being on here and sharing all your wisdom. I think our listeners enjoyed my group therapy with you. I certainly learned a lot.

Aaron Alpeter:

We've got two questions that we always ask our guests on build a business worth buying. And you guys can both answer. You can pick one. But the first one is what's the best example of a moat you've seen a business build?

Speaker 3:

I'll take that one. And I'll use OpenAI as my example because it's very current and we're using it. I think that based on their training models and their expertise, other companies just can't catch up to them. They have a huge advantage. They have a distribution channel through Microsoft, which is also putting their tech right into the tools that people are already using.

Speaker 3:

So that's massive. And I mean, let's face it, any brand that has a name that becomes a verb over time has a massive moat. So, you know, back then, it could have been Hoover or Xerox. But now it's like, let me chat GBT this. I mean, that's massive.

Speaker 3:

So that's my answer for that one.

Aaron Alpeter:

That's great. And Christy, if you had to start over today, what would you do to go about building a business worth buying?

Speaker 2:

First thing is I would build it at the pace that the market demands. I think a lot of people go out of the gates and think, can do this really quick and fast, but having that realization that you need to build a foundation first.

Speaker 3:

I

Speaker 2:

had a partnership come to me at one point in time, and they said, we've built this business. We're crushing it, but it's actually built on sand and not concrete. Because every time something scales, every time something happens, we just sink. We don't have the capacity to grow at the speed we're growing. So building the foundation and what I mean by that is having clarity on, as you mentioned earlier, what are the triggers of when we need to hire?

Speaker 2:

How much revenue do we need to have before we bring on that next team member? What standard operating procedures do we already have in place? Or if we're creating a new position that we need to create to ensure success of the team. So I hate saying it, but it's like slowing down and taking the first year or two to build a foundation that's strong, that's duplicatable and repeatable is going to increase that value at the end of the day. So starting slow, honestly.

Aaron Alpeter:

Yeah, I think, yeah, thinking back at my own life and other people I've seen, if you build at the pace of your ambitions versus your reality, you can be in a world of hurt very quickly.

Speaker 2:

Well said.

Aaron Alpeter:

Okay. Well thank you ladies so much for joining. This was a fantastic episode. And thank you all for listening to Build a Business Worth Buying.

Speaker 3:

Thanks for having us.

Aaron Alpeter:

Thanks for joining me on Build a Business worth buying, brought to you by ISBA Consulting. I hope today's conversation gave you real insights into scaling smarter, selling better, and thinking like a strategic operator. If you found value in this episode, make sure to subscribe, leave a review, and share with someone who's building their own sellable business. Until next time, remember, the real one isn't just building a business, it's building one worth buying.