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Embark on a journey to success with the Startup Founder Roadmap, your go-to guide for navigating the challenging yet rewarding world of startups. Whether you're a seasoned entrepreneur or just launching your first venture, this podcast is your compass for building, growing, and leading a thriving startup company.
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00:00 - Speaker 1
Mark. Okay, it's all good. What's up? Founders, welcome to the Startup Founder Roadmap. I'm your host, chris. Today we have a very, very special guest. I know I say that all the time, but this is a very special guest Eric Grafstrom. And this guy has built and sold the businesses, helps a ton of founders. This is the perfect person to be a guest on this podcast. Eric, welcome to the show.
00:22 - Speaker 2
Well, thank you, Chris. I hope I live up to that introduction and excited to be here.
00:28 - Speaker 1
So what is it like being in a startup world for you? What makes you love?
00:35 - Speaker 2
it so much. It's a good question because I tell people, I mean, I've been doing this for close to 30 years, you know, despite the youthful glow of my moneymaker here. You know, I think you, just you get enthralled with this opportunity to take something from an idea and knowing that it necessarily doesn't have the odds of succeeding, and I think that excites you. It's the opportunity to build something. The thought of taking something that exists and optimizing it and scaling it, which has its own set of challenges and requires a talent, is just different than this idea of well, I'm starting with a blank sheet of paper and I think for some people that's confusing, frustrating, potentially terrifying. I think for others, like me, I couldn't do it any other way.
01:32 - Speaker 1
Yeah, yeah, I completely agree. For me, I love that inspiration I get from just trying to make something work and building something from the ground up. It's super fun for me trying to see what people like, what they don't like, how much they're willing to pay for that solution, and also for me personally. I like solving the problems, the problems I had in podcasting early on. I love, I genuinely love the feeling I get when people tell me oh man, I'm thankful you made this thing because it helped me with this. I'm like, wow, that's the exact problem I had and you don't have to experience the pain that I did. I love that part of it. It saves me, it gives me a lot of inspiration.
02:11 - Speaker 2
Cool, yeah. No, there's an endorphin rush of seeing something that you took from an idea rattling around in your brain to maybe getting some help and pulling together and seeing it implemented in some capacity, and even if it's $20, I mean, it doesn't have to be millions of dollars Just seeing someone being like, yep, I want that is just this crazy feeling that I think I have and will continue to desire, no matter what I do.
02:45 - Speaker 1
I love that. I love it. So let's get into some of the starter stuff. Man, I want to really get into first, team building. Right, I see a lot of companies now that are being built where people are millionaires, they're making really good money and they don't have a massive team. Do you believe that a team is necessary to building that $10 million plus company?
03:08 - Speaker 2
I mean, yeah, I do and I'll tell you why. But I also look, entrepreneurship has different flavors and you know, I've been a part of Silicon Valley startups. I've been a part of startups that have succeeded in things that have, I mean, failed spectacularly. Startups that have succeeded in things that have, I mean, failed spectacularly. So you know, today I work with a lot of small business owners, and so those are mainstream businesses. So entrepreneurship means a wide array of things. It could be a tech startup in bleeding edge technology. It could be a carpet cleaning business yeah, cleaning business.
03:43
And so you know, for me, you know as somebody who I started my career, you know, at a company. I was a journalism major and had no idea what was in front of me and so many people helped me along the way. So team means different things. To answer your question, team may be people who are employed or contracted to work with you on your startup. It also may be mentors, advisors, it may be, you know, service providers. There are going to be people that you're going to need to rely on along the way to get you to the next level and then from there to that next level.
04:19
So I think the idea of doing it solely on your own, you know, is kind of a pipe dream. I mean, you may say, well, I just have two people on my team, quote unquote. Well, that's who you're paying. But the reality is your team may be a contractor you found on Upwork who somehow unlocks some magic with marketing automation. It may be other people. So you're going to have a team of people, and it depends on how you define it. And so you know, look at it, how you need help and where you're going to get that help from, and that's that's, that's your team. So you know, be open-minded to that, to that definition is is what I'd say and make sure you're hiring good people. We can talk a little bit more about some of that too, but yeah, you have to have some form of a team along the way.
05:10 - Speaker 1
Yeah, I think the team is important, but for me I can say I honestly don't want a massive team. I'll be honest and say I don't want to be the person that has to manage like 50 plus people. That just isn't a lot to me. Like I don't when I think of my ideal business and my ideal life. It doesn't include managing 50 people. That's just a lot for me.
05:32 - Speaker 2
Yeah, and I would say I would. The term I would use is in, in, look, I, I. I share some of that. That that kind of mentality, which is a team doesn't necessarily have to be direct reports, is a team doesn't necessarily have to be direct reports. Like, I don't want a whole bunch of direct reports at this stage in my career. Some people think that that's what it means, but I think you know a team may be people who come alongside you who aren't reporting to you necessarily, or maybe they are. But yeah, no, I totally get the. You know, do you want to manage a lot? And quite frankly, I think managing people in organizations in and of itself is its own skill set, and recognizing whether that's something you're good at and want to do is really important because as you go from being someone you know who may be working by yourself into building something up, that may be something that you want to bring in is somebody who's kind of more of a people and operations type manager.
06:26 - Speaker 1
Yeah, yeah, I think that's something that you should be hiring for. So what's that first hire like? Or better yet when should you make that first hire? I'm a startup founder. I got my idea, I've got some validation. I've even gotten a couple of customers in a door all by myself, and I feel I'm getting inspired and I'm motivated. I feel like I can do a lot more by myself and I feel I'm getting inspired and I'm motivated. I feel like I can do a lot more by myself. But when would you advise that kind of founder to make that first hire?
06:52 - Speaker 2
I think one is that hire should be effectively curing a pain point, and there's certainly something to be said for having to work hard, but when you're looking at it, you have to stop and say something to be said for having to work hard, but when you're looking at it, you have to stop and say, ok, I can't do all this by myself, by myself, and I'm incurring some type of pain, right, whether it's lost revenue, too many hours in the day, you know, spent working. There's a variety of things that maybe cause it. But I think what's most important is to take a step back, and I always kind of look at them like I draw a little. You know, in my mind mentally, I draw a line between here's things that I'm really good at and I enjoy doing here's things in the middle that I'm okay at, I can get them done. I don't particularly enjoy doing them. And then there's things that either I can't do coding maybe, whatever it may be or if I do it, I'm detracting value from my business.
07:55
And so, you know, when you're in those early days, I think it's important to really kind of focus on okay, what is it going to take to kind of grow the business? What's holding you back when it comes to your first hire and find somebody who may be focused on somewhere in those last two, which is something you know you just, you just can't do on your own, or you're just doing a terrible job of it or you don't enjoy doing. And bringing in a true professional maybe elevating you know whether it's the service offering or the product design or something like that but what's going to elevate the game? It's not just solving that point in point. What's going to elevate the game and take the startup to the next level?
08:36 - Speaker 1
Yeah, yeah. I think as founders we probably cause starting off, you kind of have this mindset of I want to do everything because I have to do everything. It's natural, yeah, but I think we got to evolve past that stage of wearing all the hats. Like, wearing all the hats is okay and I think it's even necessary early on, but I've been learning that you have to be willing to kind of pass the baton a bit and let some other people come in and help you.
09:06 - Speaker 2
Yeah, I you know and again I come up with these little pithy things that that may or may not be helpful, but I say, you know, when it comes to building a team, step one find people that are smarter and better than you, and and you know that, depending on where you are in life and your career, it's for some people that may be a difficult thing to say. I hope I'm surrounded by people that are wildly smarter and more talented than me. Two is build trust with them, because the trust that you're going to get I'm not sure what just happened there- it's the reactions.
09:39 - Speaker 1
If I do it, it pops up too. It's not you. I'll sit on my hands.
09:44 - Speaker 2
I'll sit on my hands. I don't know what's going to come up next. So you know. So one you know find people that are smarter than you and better at their craft than you are. Two is to build trust. And then step three is then your job is to get out of the way and empower them to do what they do really, really well.
10:03
And I think sometimes people say, well, like I need somebody to do X.
10:07
And if someone's really talented, let's just say sales or product design or marketing, your job is not to tell them how to do their job. Your job is to make sure that, like, they're a hundred times better than you at selling or product design or coding or whatever it may be, than you are, and then develop a level of trust so you can get out of the way. Because the reality is, is really, really talented people? They want that level of autonomy, they want to know that they're working on something. They need some level of guidance and coordination. But really talented people want to know that you are building them up and empowering them to do what they're really good at and what brings them joy and what makes them thrive, not simply saying, like, did you do these 27 tasks the way I want them done, when I wanted them to done, how I wanted them to get done. That's, that's a recipe for disaster. So it's kind of a really smart build trust, get out of the way and empower them.
11:03 - Speaker 1
I like the get out of the way part. I've actually me doing what I do with my podcast agency. That's one of the hardest things is getting some of these startups or some of these founders to just kind of just back away of it while we do the podcast strategy or production and all of that stuff. It's like I'm the podcast guy. You brought me in to do podcasting, let me run the show and then you make the content and that is I think. I think ego is something that stops a lot of founders from getting out of their way there.
11:36 - Speaker 2
I think you're right, I think it's ego, I think it's fear are two big drivers, which is I've been doing this.
11:43
You know well enough so far that I've gotten it to this point where we're driving a little bit of revenue, we're getting some attention, and nothing wrong with that. But to really kind of scale something, you, you, you would better find those people who really kind of say look, I, I'm, I'm the expert in marketing, I'm the expert in, you know, selling, whatever it may be, you know, and if getting them their dry cleaning or, you know, ordering a different monitor so that they can do their job better, is what it takes, Do those things, because otherwise you really are, you're going to, you're going to inhibit their ability to execute at the highest level. You're going to inhibit their ability to execute at the highest level and in some cases, you're going to drive them away and you're going to degrade your talent level because it's just somebody who really just doesn't care and they're not committed and they're just there to collect a paycheck and do what they're told to do, yeah, and it won't be as good.
12:37 - Speaker 1
I think we alienate people in that way. They just can't execute as good. It's really hard. The outcome of whatever they're doing it just doesn't work. So I wanted to bring up your company exit guide.
12:54 - Speaker 2
How important is having that team built when you're trying to exit your company, when you're trying to make that sale. Well, it's huge. So the back story is I spent a long time in early stage tech startups, lived in Silicon Valley for 17 years and found myself I had worked with a couple of companies that were in distressed situations, so raised money, got in over their skis and didn't know what to do and was getting brought in to assess the situation, figure out what to do and then try to go do it. And so in some cases we're able to turn things around, put the company in good standing, bring in a new management team. We're able to turn things around, put the company in good standing, bring in a new management team. Other cases it made sense just to simply sell off the assets and somebody else would take over, and in a handful of cases it was shutting it down. And I decided to kind of take that experience from Silicon Valley tech startups, which has its own laws of gravity and in ways that it works, and move that into small Main Street business owners. So the people I work with today you know that are customers of Exit Guide or you know it's the HVAC business, it's the local coffee shop, it's somebody who has a business that it's not going to attract business brokers, M&A advisors, and we help them move through the process. So that's the backdrop.
14:08
In every case, whether it's a Silicon Valley startup or whether it's a small business in Cleveland Ohio that sells furniture, if somebody is coming in to take that business over, one of the key questions that they're going to ask, above and beyond the financials, is what's the owner dependency? And if you are the owner, and this is and if you are the business and this is a hard thing to explain to some people, especially if they're driving decent revenue, because they'll say this is a great business the problem is you're the business. They're going to say let's just assume you know, chris, you have a coffee shop. You know if, if you're the only one that can make the coffee a certain way and you own all the customer relationships, everything, like the minute you leave, you know I, as a potential buyer, I'm going to say well, wait a minute, man, Like I can't, you know I'm going to lose 50% of the revenue. It's going to walk out the door.
15:04
It's especially true, actually, in service-based businesses, right, when you're executing on contracts. You know lawyers, CPAs, digital marketing agencies that are really small. Yeah, Development shops and people say, like what's a great business, I'm like it is for you? Yeah, but the minute that you leave, what am I buying?
15:27 - Speaker 1
Because in most agencies, like the clients come from referrals, it's relationships.
15:34 - Speaker 2
Well, and trust, like if I hire you as your podcast agency and you leave, they're like, well, now everything's on the table. And they're like well, now all this team is good. And be like well, that may be, but I've been working with Chris for four years. And be like, well, that may be, but I've been working with Chris for four years and I know the way he does things. In the end result is always awesome. It's always the top, like, it's top flight. And they're like well, we'll do the same. I'm like maybe you will, but now you're giving me a reason to take a step back and say, okay, chris is gone. Should I look at two or three other options here before I make any type of commitment, so that owner dependency becomes a huge, huge factor as you're building your business. And look, I get the ego feed it can be of everybody saying like Chris is the best and we love this and it's all awesome you know you feel needed, you wanted.
16:26
there's joy in delivering something that you're good at to people who are willing to pay for it and see value in it, but if you want to exit, are they doing business with the business or are they doing business with you?
16:38 - Speaker 1
And this is an interesting conversation because I think the term personal branding is bigger than ever now- and a lot of people are building. They're building personal brands and they also built a business. That's attached to the personal brand and because you marry the two, you can't separate it, and I think that's a huge problem. Whether it's a newsletter or an agency, I see this a lot where people's entire business is built on them and who they are personally, and not like the systems or the processes or even a team.
17:09 - Speaker 2
Well case in point. So most of our traffic comes from pay-per-click advertising or organic traffic, so people come through. Our goal is to kind of take the LegalZoom business model of automating a kind of an opaque, confusing process and bring it online and supplement it with professional support, so we'll help people go from okay, what is my business worth and what are the documents? How do I get prepared? And then you know where they need help. They can pay for coaching and some other services. We had a client who's still with us she's currently not active in paying for it with us. She's she's currently not active in paying for it, but she came to us and she had built a business that that I think is is, you know, low seven figures, but it's attached to her name. Now, where she was smart is she said I want to exit this in two years. And so she came in the door with a new domain and a desire to exit, but she realized she didn't know what she needed to do to kind of get to that point. So that's where she employed our platform and our services. But she had to basically work very proactively and that's where she is now. I can't necessarily help her with exit. She needs to go execute on these things.
18:31
But you're a hundred percent right, chris, in that if you build up this personal brand and you're on Twitter and all these other things, the day that you exit or decide you want to exit, it's very rare that someone can take over your personal brand and succeed with it. And if they do, they're going to probably want a discount off of it, as they should. To be honest with you, yeah, or you need to say, okay, I need to make this shift away Now. If you plan to work for 10 years and then shift into something else, retire, go into a whole new field, and you want to keep that personal brand, that's great. But I can tell you this isn't my opinion. This is just fact. In the marketplace, as you build a huge personal brand that drives revenue associated with that personal brand, it is going to come at a discount when you try to exit it and someone else tries to take that over.
19:22 - Speaker 1
That makes so much sense to me. I get it because I'm in business and I have to get clients and customers and all of that stuff. I couldn't imagine it being reliant on somebody else's reputation or who they know and it just it's not a. It's not the best approach to business and company building in general, and I think I think it comes down to what you want, though, like you said, because for me, with my podcast companies, I don't plan on selling. I just I love what I do. I don't plan on selling in I don't know it would take like 50 million plus to get me to sell any of it. I just love what I do.
19:55 - Speaker 2
I know this right. If I want to bring you a deal, it's got to be 50 million. I talked to the guy.
20:01 - Speaker 1
Right, okay, so I got another thing on this. What do you think about these other businesses like newsletters? I've seen a ton of newsletters being bought and sold in the past couple of years and it's become a new phenomenon where people are building newsletters and brands and then selling them off. Is that something that you and your company, exigat, are into?
20:21 - Speaker 2
I mean not really. Here's the reason. Small businesses in the US accounts for about 40% of our GDP yeah, a lot, so it's huge and about 90% are really really small, meaning they're worth less than $5 million. So newsletters, podcasts even my 20-plus year career in, you know, saas and the internet and venture-back backed companies all that other stuff it really is a relatively small part of the overall economy.
20:54
Now you can get into the impacts Meta and others have on the stock market and that's just a different thing. Same goes the stock market is not the economy. There are different things, but you know where we see a huge gap in the market is that kind of main street business owner. It's massive and you know they're not as digitally savvy in some cases in terms of how to use tools, and that's where there's a huge, huge pain point. 85% of these things are owned by Gen X and baby boomers. So you also have this huge demographic issue, which is a bunch of people who own most of these businesses are all over the age of 60. So time is going to push them to do something here.
21:42
Newsletters, there's MicroAcquire and other companies that Flippa and others that I feel like do a pretty good job of servicing those things. But the other thing and not to sound like the naysayer, the things we hear about are kind of the exceptions to the rule, because that's the cool stuff to report on. They don't talk about the other nine out of 10 that fall flat on their face or they generate $400 a month or whatever it may be. So I've lived through all the booms and busts. You know, if you're not in love with the problem that you're trying to solve with your newsletter, your podcast, your SaaS offering or whatever it may be, this is going to be a really tough and long journey that may not result in what you want that's interesting because I see that as the most popular.
22:36 - Speaker 1
But I do agree that like the laundromat down the street or or the tire shop, like those kind of small businesses really make america go man, it's so many, they're everywhere and I think more people understand it than like in this digital space. I think we kind of take for granted and like we think, well, if I know how to make a landing page and do all of this stuff, then everybody else does. The truth is most other humans you meet have no idea what's going on in this space, like none whatsoever.
23:08
It's kind of hilarious when you really think about it.
23:10 - Speaker 2
And and you add to that they're doing just fine.
23:16
Like they live in a nice community and they have a you know food on the table and they're enjoying their lives. And you know, again, I spent. I grew up in this space Like I. I again I spent. I grew up in this space Like I. If you asked me to go work at a regular company that was not in tech, I'm sure I'd be a disaster. So I love this world.
23:36
But at the same time, someone said, like how can you not know about, like you know, the guy who runs the HVAC company with you know, 12 trucks and 30 employees and has no idea what a landing page is, has never registered for a Twitter account, he's making 300K a year and he's going to sell his business for 10 million bucks.
23:57
It happens all the time. Most of the wealth in this country comes from two things real estate and small business. The stories that are in the press are the 25-year-old out of Stanford who dropped out and blah, blah, blah. But statistically speaking, if you are under the age of 35 and you want the highest likelihood of becoming a millionaire by the time you're 50, do not go into early stage tech. Go into a service-based industry plumbing, hvac, whatever it may be. Find a small business owner who's over the age of 60 who will mentor you and eventually sell you his or her business. If you can do that and that business is currently generating at least $750,000 a year in revenue and you can stick with it for 15 plus years, that is the greatest likelihood of when you'll become a millionaire, bar none. This isn't me making this up. This is what all the economic data suggests, and AI ain't going to replace plumbers.
24:57 - Speaker 1
I know right, that's another thing that the AI movement. I think it's creating more buzz and frenzy, but again, it's still us, the same people in the ecosystem. I don't believe that AI is necessarily adding people to our ecosystem to where we can say that the tech industry or SaaS can compete with local businesses. I still don't think we're even close to that.
25:21 - Speaker 2
I use TechGPT pretty much every day.
25:25 - Speaker 1
Maybe one of my family members knows what it is. Nobody else knows. They have no idea.
25:30 - Speaker 2
Your holidays are probably like mine. What do you do? He works with computers and you're just like, yeah, it's fine uh, yeah, that's exactly what it?
25:37 - Speaker 1
is. I think we gotta, as founders, we have to understand that, like I think when you say you want to be a real entrepreneur or a digital founder or something like that in the online, virtual, internet space, you are moving to a completely outside realm of society, because most of the stuff that we even think about the average person is just completely unaware it exists and I still think we're like maybe 10 to 15 years off of them like even catching up Cause, like when I look at online courses, it's I think most people would benefit from some kind of online course, but again, that's another one of those things where people just they have no idea. It's like it's a whole nother universe to them. It's it's kind of mind blowing sometimes man, it really is.
26:26 - Speaker 2
And you mentioned landing page. I think it's a's kind of mind-blowing sometimes, man, it really is. And you mentioned landing page. I think it's a great example. Let's, let's just project two years from now so we're 20, 2026, february 2026 will you be able to use ai to, say, design four variations of a landing page? Um, implement a split traffic, you know, for you know 30, identify, you know the winner from that result. You know, with this type of, you know, you give it, you give it those chat, you give it those instructions which were kind of closed today. So let's just say, you know, february of 2026, what is the likelihood of that being able to get implemented?
27:07
Versus, come to my house, install a new washer and dryer so that I can get my laundry done, and so when people say, like it's going to be, just I'm like it will, but who's not going to have a job in February of 2026? The person who's out there kind of using Optimizely and all the other tools to design those landing pages and has all this, you know, insight and knowledge and experience and mental pattern recognition. Or the plumber who's going to say, well, you know, because you've got a gas hookup, here's the kind of dryer you're going to need and you know, so on and so forth. And, like you know, I'll be back tomorrow. Like so, ai is going to disrupt, but you and I live in a world where the disruption and the job displacement is going to probably see its biggest impact versus, as you kind of point, the rest of the world. You know is out there and they're doing just fine and they will be impacted and they will see their lives hopefully improved in many aspects.
28:07
But, yeah, there's the entrepreneurship is a very broad term that describes a big, you know, approach to business and you kind of need to be able to kind of look at the whole market and how you're playing a role and I mean even even newsletters. Like I mean, will someone be able to say, like, help me craft a newsletter that will see this type of open rate, click through rate and engagement rate and things like that, and write articles for me and things like that? And you can say it's the prompt engineer. But you're like, yeah, but there used to be people who actually wrote those and people who designed the emails and the graphics and yada, yada, yada. So it's going to be interesting.
28:48 - Speaker 1
Yeah, for sure, for sure, man, I love what you're doing in this world of working with the small businesses. I know that in like the next five to 10 years, most of those boomers that have the businesses Gen X, a lot of them are going to be out of here and somebody is going to have to take over those companies. You know, because right now if I call a plumber, it's going to be hard to get a plumber on the line. It's actually difficult to work with small local businesses. It is very challenging and I think if some of the digital entrepreneurs move into that space and kind of combine the worlds, they can be really, really profitable. That's where I think a massive opportunity is is if you can take your digital experience with like some skills in the outside world in the service space and put them together, I think you could build something incredible.
29:39 - Speaker 2
I think not only do, I think that's right. You seeing, if you, if you're active on twitter I'm not, I'm never going to call it x, it's just dumb never you're active on twitter. There's, there's. I feel like, you know, I don't smoke, but at times I feel like I should have the unfiltered camels or pal mouths and be like but you know it, you know it. There's a huge movement for people that are doing self-funded searching and things like that. I see a lot of hope in people that are younger, that are exploring this. I think it's awesome. I mean go A couple of things that I would, you know, say is one don't assume that these owners are dumb just because they don't necessarily use MailChimp or other things that have been optimized their business.
30:24
They are probably a millionaire and you are not. They're doing something right. They understand business. Now, maybe they don't understand the latest digital trends and you could optimize things and make them more efficient Totally, but they probably also know that too. They just haven't taken the time and energy to put into it. And that may because family, busy with business making great money, didn't want to, couldn't do it, inept, who knows? But if you're looking at it, I know a guy named Alex out of Cincinnati who graduated you know he was newly married with graduated from college, newly married baby, I think very close to being on the way and turned down a job at Procter Gamble, which I'm sure I don't know. His parents may have made his parents, like, have a heart attack and but the thing is is he had a business that he had started in college to help him fund his school of designing websites for blue collar businesses.
31:24
So there's different ways to approach this. You could say I want to take it over, but you could also say, hey, look, all these businesses need help and if you can make it affordable and execute well, just helping them with some of the basics of making their business more efficient is your own service provider in your own local community. You don't need to get people from all over the world or in the US. You may just say I'm in Louisville, kentucky, and I'm really great at these things. Well, instead of trying to go out and become a digital agency working with the local startup community, maybe join the Chamber of Commerce and see who you can help there community like, maybe join the chamber of commerce and see who you can help there.
32:03
There's probably a lot of people that are over the age of 45. That'll be like look, if for 500 bucks a month you could just do these three things for me and I don't have to worry about it, that'd be great. You may say that's not a lot of money. Well, you get 10 of them, 20 of them, 30 of them, and you know, once you kind of get them through that kind of front loaded process of getting up and running, you may actually have an awesome business on your hands.
32:26
Yeah, so this is a huge part of our economy that I think oftentimes gets underlooked for understandable reasons. But there are plenty of ways that we can help kind of that kind of Main Street business owner.
32:38 - Speaker 1
Yeah, man, this is, this is good. I could go through this all day. I love these conversations about business from that kind of from the outside perspective. It's a little different, not the traditional or the usual stuff we see in this space. On a podcast it's always like oh, what's your cat? Or like all of that stuff. It just gets kind of redundant, Honestly, we hear it and see it all the time, so I'm glad we could take the conversation in this route. What is one piece of advice you would give to somebody that is trying to exit their business?
33:12 - Speaker 2
Prepare, prepare, prepare. This is like selling a house, and I think what gets overlooked too often because people don't know about the process, is they start with, okay, my business should be worth this amount of money, and again, there's nothing wrong with this. But over 50% of small business transactions fail during due diligence, and so what that means is people skip this step, and the analogy I often draw is you wouldn't sit there on a Saturday morning and be like you know what. It's time to move. I'm going to sell my house and then just stick a sign in the yard. That's crazy, man.
33:56
You didn't finish painting the bedroom. Your garage is just a mess. You got four dead trees in your backyard, like dude, you got to clean this up. You probably should, you know, maybe kind of have somebody like an electrician or somebody come through. Make sure there's no problems. You know that is a total common sense thing that we do. So you're preparing, you're preparing your house to sell it, and you oftentimes would either go on to something like Zillow or Redfin and you'd look at comps in your neighborhood and you'd say, okay, these houses are selling between $400,000 and $650,000. So I'm not going to expect $900,000 for my house. You might talk to an agent, so preparation is so fundamentally key. So when we started this, I had a thesis. One is that too many small business owners were getting overlooked in terms of being able to access these resources, largely because resources are getting paid on hourly rates and commission, so naturally they're going to focus on businesses that are worth at least $5 million.
35:03
There's a lot of them, but 90% of them are worth somewhere between $250,000 and $2.5 million. So how do we help them? And then the other part of it is I think the challenge is not necessarily finding a buyer, but it's the steps leading up to, you know, being able to ready to consummate a transaction, getting that transaction done. So a big part of our platform walks people through a you know, using a dashboard, what they need to do and how to organize that. And people say is that a value I'm like? Well, we've helped thousands of people up 45% know who they're going to sell their business to family member, business partner, employee, someone in the local community.
35:42
Another 15% to 20% have no idea what they want to do and so they may not be able to sell their business and they're going to need a plan whether it's selling the assets.
35:51
So a bulk of the market needs to go through this education process and this preparation process before they can even tell somebody that they might want to sell it. So you know, prepare, learn what your options are and please, please, please, do this well in advance of when you're ready to kind of exit your business. You're in a very difficult and unfavorable position if you're like I need to sell this in the next three months for whatever reason. Well, it's like it's going to take you. You're not going to need to sell this in the next three months for whatever reason. Well, it's like it's going to take you. You're not going to probably be totally prepared. We'll do our best to help you. We can certainly put you in a much better position than you would be otherwise, but you know, now someone's looking at a business that's going to need some work just to clean it up before they're ready to actually make an offer, and so that's going to impact you.
36:39 - Speaker 1
Yeah, yeah, that sounds what sounds right, man. Be ready and have all your ducks in a row so that if you want to sell, you can kind of cut down that processing time. I imagine that you can eliminate a lot of that time by just being ready to sell. Man, this was such a good conversation, man.
36:57 - Speaker 2
I love learning this stuff.
36:58 - Speaker 1
I'll be thinking about buying a laundromat or something man or a tire shop or something.
37:08 - Speaker 2
You'll be running your podcast with the noise of those pneumatic drills or washing machines clanking around in the background. People are like well, I like him, but there's all this weird noise in the background.
37:19 - Speaker 1
Yeah, I've thought about a lot of this stuff, man when?
37:26 - Speaker 2
can people find you and more about the exit guide? Sure, Just exit guidecom. My email address is Eric at exit guidecom and, uh, you know if, if, if you listen to this podcast and want to reach out, mention Chris, please. I always like to know where, where, uh, and we can certainly provide a discount on a coaching session for listeners of your podcast. So just email me directly, eric at exitguidecom, mention Chris and his podcast and we'd love to help.
37:55 - Speaker 1
All right, man. Eric, thank you again for being on the show. This was great.
37:59 - Speaker 2
I appreciate it, Chris. Thanks so much.