Shownotes
Our Inaugural Episode!
Are you looking at buying a business but are aggravated with the endless string of bureaucratic BS?
We are too.
Join Deb and Richard for an exhilarating live stream journey into the world of business acquisitions!
Our dynamic new show is designed to empower you and cut to the chase of the business buying experience.
****************
Follow and Subscribe on YouTube: https://www.youtube.com/@BizBuyersAlly
Deb’s Website: https://www.debcurtis.com/
Richard’s Website: https://richardparker.com/
Transcripts
0:02
welcome to headbands and handkerchiefs where business buying banter meets no BS
0:07
reality get ready to dive into the world of buying and selling businesses without the fluff and fancy jargon we cut
0:15
through the BS to bring you raw unfiltered insights from industry experts seasoned entrepreneurs and no
0:23
hold bar discussions they get straight to the point whether you're a seasoned
0:28
business buying Pro or a curious aspiring entrepreneur this is where the
0:33
real talk happens buckle up for headbands and handkerchiefs because in
0:38
business there's no room for sugar cooing let's get down to the Brass
0:47
tags hey hey hey what's going on today how you doing Deb did you like
0:54
that opening Richard that's like frightening that's like real legit looks great sounds great looks great I almost
1:01
look good you look terrific as always but yes terrific yeah I love the opening
1:07
um I actually picked the the the song out um little rock and blues because
1:13
that's my kind of music I love like AOS Smith Chris Stapleton any kind of music with Blues so um what about you what
1:21
kind of music do you you you went to the um you went to the eagle was it the Eagles concert you tell I did how was
1:27
that Minneapolis saw the Eagles um fantastic uh Glenn Fry he's what
1:35
76 and he doesn't look old at all he looks great Joe Walsh he's 75 he looks
1:43
old but he's still he still can yeah oh look it we got some people
1:48
coming in welcome hey Kelly good to see you um hey Mike Mike from the hounds
1:55
business Community thank you so much for coming here um check out that chat cat is filling up Richard beautiful we're
2:02
glad to have everybody yeah so this is our first show Richard headbands and
2:09
handkerchiefs and um backstage before Showtime we were just talking about how
2:14
we came up with with the um the name obviously everybody knows me because I
2:20
love to wear the headbands and I got to know Richard on LinkedIn of all places
2:26
and we decided that we walked on Common Ground we love to support people that
2:32
want to buy businesses and all of a sudden I noticed show them what's in your little coat pocket there Jack that
2:38
was this and then you go check it out and my the picture that you saw the original picture on LinkedIn or the one
2:45
that's on one of my uh websites has a pocket square handkerchief I don't want to confuse the two because I don't want
2:51
to start blowing my nose into my pocket square but it had the exact same pocket square as you have in your headband
2:57
wearing my famous Pink Suit which always solicits or elicits a few comments
3:03
that's right so it was a divine intervention Richard amen we could not figure out what to call this show and um
3:11
my uh good friend from the hounds of business Community CIA from brilliant
3:18
beam media ladies and gentlemen she is our behindth scenes producer and she
3:25
even has a secret mic can you say hi to everybody CA hello hello
3:32
hello oh wait wait wait actually it would be more like
3:38
this hello hello hello that's better that's much better yeah there we go so
3:45
ladies and gentlemen if you are watching this live take it from me and take it
3:51
from Richard you have to hire help production help for behind the
3:57
scenes I try to do lives on my own failed miserably brilliant beam media
4:04
why don't you put up that little QR code if you would seea uh this is who I
4:10
engaged Richard and I for our show and behind the scenes we would not be able to do what we are doing today without CA
4:18
and her team from brilliant beam media so if you are watching the show right
4:23
now and you don't want Gremlins stealing your show trying to put on a live by
4:30
yourself take a picture of that code on your phone and connect with brilliant beam media trust me I feel much better
4:38
don't you Richard knowing that CA is behind the scenes can we give her a hand I'm like you know you know like I'm so
4:44
neurotic right and preparing for this I'm thinking like we got to do four hours of rehearsals right just to make
4:49
sure all the technolog is working and you're a master at this and then you introduce me to see and she said guys I
4:55
got you just we'll we'll log on half an hour or so before and we'll just do a run through and I'm thinking to myself like a half an hour before how is this
5:01
even possible right it could it could take me a half hour just to log on but boom boom boom boom boom she's got this
5:07
and and you're right she says don't worry I got you and believe me she's got us she was unbel she's unbelievable I
5:13
love it I got a little thing up at the top there you see that someone scan the QR code I wouldn't know what the heck or
5:18
how to do any of this CIA thank you can you give yourself a round Applause I know you got one in there
5:25
[Applause] somewhere woohoo
5:31
I love it okay okay so everybody came here because they want to learn how to
5:38
buy a business and here's the good news Richard we're not just gonna be here today we're gonna be here what every
5:45
week on Thursdays every week on Thursdays yep every week we got a lot to cover oh my gosh and and we have a lot
5:53
to cover because it's always changing right right yeah it's and the landscape you know some of what we see today was
6:00
almost predictable a year ago you know talking about interest rates and other things but you know I'm doing this for
6:06
God in February it's going to be 34 years that I'm doing this which is hard to believe considering like I think that
6:11
I turned 18 about an hour and a half ago and and like I think about and and yet and done and seen and involved and
6:18
looked at and and represented in both sides of the equation hundreds and hundreds and hundreds of transactions
6:24
and it's and it's unbelievable like I know for me anyways I still learned something new in every transaction action so it's it you know this the
6:31
world is fascinating but there's never there's never going to be a a shortage of of subject material that's right yeah
6:39
I'm with you on it and and uh 30 years is is how long I was in Corporate America um and 20 of it was in Small
6:48
Business lending in some capacity and um oh God like you said every
6:55
transaction brought some kind of a hairball curve ball you name it yeah or
7:01
both yeah or both but then there were some easy ones that would come in too um so headbands and handkerchiefs business
7:09
buying banter we're going to be here every Thursday 2 pm Eastern um so please
7:15
mark your calendars and come back this is just our kickoff episode um and I do
7:21
want to thank uh one of our sponsors for the show Richard um that would be
7:27
Walking Tall movement and and um the two gentlemen that are um working on this
7:34
project big hearts they both are survivors of mass massive shootings the
7:40
one in Las Vegas a couple of years ago with the big concert and then the Fourth
7:46
of July shooting in Highland Park um if everyone on the on the live today could
7:51
scan the QR code that is put up on the live here and follow Walking Tall um
7:59
they they are a small movement today but I they have big hearts and if if
8:06
everybody recalls yesterday in the news there were two different mass shootings one in Vegas one in Texas so Walking
8:13
Tall movement their mission is to reach out to the people as fast as they can
8:19
that are dealing with these kind of unannounced things that happen in our
8:25
world today so um I would like to just say all of our prayers and thoughts are
8:30
with all of the victims and the survivors and these two gentlemen with Walking Tall they are the best um and
8:38
I'm proud to say that they are sponsoring the show and um we We rise
8:43
together right Richard We rise together absolutely I mean it's just it's ridiculous that an organization like
8:48
that even has to exist right I was born in Canada and there's you have far less of it although there's been a couple of
8:55
uh really horrific mass shootings over the years not not Rel you know not commensurate let's say with with the US
9:01
rd:9:08
which was one of the best days of my life but it's still astonishing to me that you know that it happens and
9:13
yesterday we say it like we had two of them yesterday which like just say it matter of factly it's just they're doing
9:18
God's work and and and um you know any support that we could provide to them or and people could provide would be
9:24
wonderful absolutely and um I was talking to Chris one of the partners of
9:29
the Walking Tall movement the other day uh and similar you know to to any industry the qualified are truly the
9:37
ones that have walked through the fire they are the qualified to help pull others through uh in good times and in
9:44
bad so thank you Walking Tall for uh being a sponsor of today's show and uh
9:50
we appreciate all that you're doing absolutely and I do want Deb I'm going to give a shout out to someone who's
9:55
who's uh G to be uh participating today for about half an hour he's not a sponsor I I am probably more of his
10:01
sponsor than he is of a sponsor but this is my my son Jake's one of his closest buddies his name is Miles Woodbury 21 I
10:08
think Miles and um he started in the he's he's mine and my wife's we call him our adopted son but he started in the uh
10:15
real estate business residential real estate last February and he's very entrepreneurial he got all excited when
10:21
he got invited to today's episode I'm sure he'll be in his own business soon enough he actually has closed a couple
10:26
of transactions within his first year and got his first listing actually last week which is a massive Milestone right
10:33
when you're selling real estate and so that's very exciting and I know he wants to eventually get into the world of Entrepreneurship so miles if you're
10:39
listening I know you said you could only join for about 30 minutes but I'm thrilled to have you I'll call him my son because he is my adopted son and he
10:45
always shows up at [Applause] our I love it well we were just busting
10:51
his chops this week that he always shows up at our house at you know when Sarah's about 3 minutes away from taking dinner
10:57
off the stove top he's got great timing great does he do the dishes when
11:03
when dinner's done then yeah oh yeah yeah yeah yeah he's pretty good he's pretty for him that's good okay well
11:11
listen uh we're gonna start the program here and just kind of Dive Right In um
11:17
you know with our goal here is to educate all the business buyers and and um I'll kick off with um what is the
11:25
market like today right now when it comes to business buying and the interest rates and how do you navigate
11:32
and um that that's the question Richard how do you navigate you you just can't
11:38
navigate as a business buyer the Waters of finding the best
11:45
bank loan project for these transactions when you buy a business and a big
11:52
confusion Richard and maybe you can um tell me what your thoughts are people
11:57
think that the SBA is what gives the money the SBA which stands for small
12:03
business administration they are an entity of our US government and they provide to all
12:12
the bank lenders up to a 75% guarantee of the
12:18
business acquisition loan so the government doesn't give the money everybody complains quote unquote about
12:25
the SBA well they're not the ones giving the money Richard they're guaranteeing the banks that give the money right
12:33
right so there's and and you know there's there's a lot of misconceptions in the whole process of buying
12:38
businesses one of things certainly as it relates to lenders understanding that they're going to deal with a bank and
12:44
that the SBA is in theory they're guaranteeing it to and to an extent underwriting it but what's critically
12:50
important and how you and I originally met was how does someone facilitate that or
12:56
make that process simpler more stream lined because I think the first knee-jerk reaction of an individual
13:03
looking to acquire a business is the government is not going to give me any money that's the first thing and if they
13:10
happen to get past that it's like well it's it's probably impossible right or
13:15
close to Impossible and so there's such a lack of understanding yeah it's a complicated process and it takes time
13:22
and there's underwriting just like there is if you're going to get a loan for a home I mean it's no different but
13:27
understanding that the process is very doable and the terms especially with the new criteria that's in place it's
13:33
unbelievable I mean the the leverage that someone can achieve to get into the world of Entrepreneurship through an SBA
13:40
loan today versus you know some of the criteria of years past is incredibly favorable it is it is and we are a lucky
13:48
country to have the SBA the um the the government guarantee I have been on um a
13:55
couple of podcasts in other countries and the only reason why they want me to talk about the SBA is because
14:02
they want their government or their leaders in their countries to hear what
14:07
our government is allowing for people to buy these businesses because it's all
14:13
intangible assets when you buy a business right Richard well for the most part I mean it's almost especially when
14:18
you get into the smaller businesses some of them have absolutely no hard assets and so you know usually the biggest
14:26
asset is between the ears of the owner and at Le every day at 5:00 and so understanding you
14:32
know individuals who are looking to acquire businesses oftentimes they
14:38
believe that Banks actually lend money to buy businesses and they don't they the SBA program does but you can't walk
14:45
into your bank down the street as a commercial lend as a commercial lender and think with no experience no track
14:50
record and you think you're going to leverage a loan to acquire a business without the involvement of the SBA sure
14:57
I mean if you want to put up 100% collateral you can get a non SVA Lo but who the hell needs that so but there's
15:03
no there's a real misunderstanding when it comes to small business Acquisitions and if you want to go through the you
15:09
know down the path of a third-party lender versus you know Aller and part of a seller balance a sale this is your
15:16
only choice in America it is your only choice no track record I mean no one's lending you money
15:23
right on right on I'm so glad you said that and and
15:28
there's a lot of talk out there about um 100% seller
15:33
notes which can be done but it scares the beesus out of me because the due
15:39
diligence in my opinion might not might lack when it comes to 100% seller notes
15:46
just because a bank your bank partner they're going to dig deep and do a lot of searches and and support the buyer
15:52
because they want to protect their portfolio to make sure what loan they're putting on the books is not going to
15:57
have hair growing going on it within the first six months right well you you have a you know one of the things that's
16:03
become a a just a a horrible problem in in our world of small business uh buying
16:09
and selling is this concept because you see a proliferation of these alleged gurus right who are selling these
16:15
teaching people how to buy businesses with no money no money down it's pretty interesting because when anybody tells me that they're a guru I've learned you
16:22
know over the years that if you're a guru you don't have to tell anybody right the world knows that but you know
16:27
these you're very you're very nice the way you position it these this concept of um buying a business for no money
16:35
down lends itself to the title of this show which is it's complete I mean you can buy a garbage business all
16:42
day long for no money down you can possibly buy a highly distressed business that and that has the word
16:48
stress in it for a reason and if you have no experience as an entrepreneur the last thing you want to do is buy a
16:54
distress business because you're going to have enough of a challenge learning how to be an entrepreneur and a business owner of a good business and so this
17:01
concept of buying businesses for no money down it's it's just not a reality I mean it it's and he's certainly not
17:07
going to get a good business um one of the things by the way that someone was asking um whether or not foreign
17:13
Nationals can qualify for SBA Loans and so we should touch on that in a second
17:18
but to to wrap up the point related to you know 100% seller financing I'm a big proponent of seller financing as part or
17:24
all a component of the transaction there's no doubt that puts skin in the game it really validates everything that
17:30
they've represented it represents and should be part of potentially the financing but anybody who's looking for
17:36
you know businesses no money down I wish I could help them I wish that was true but it's it's complete BS I mean it just
17:41
doesn't happen so people should save themselves a whole lot of time effort money and heartburn because that's not
17:47
the way you're going to get into a business any good business and you want a good business oh yeah preach it now
17:53
Richard come on well the one thing I've always liked with the SBA even when criter IIA was
17:59
was so rigid that the percentage of SBA back small business Acquisitions was small is there's probably no better
18:07
resource for a buyer to do their due diligence right if it passes the SBA
18:12
muster and their underwriting I mean that goes a hell of a long way in validating the the core fundamentals of
18:20
the business I mean buyers can take tremendous consolation in that I mean it's it really increases your comfort
18:26
level versus you know an accountant or others that may be involved into due diligence sure they're very capable but
18:31
the underwriting is Hefty right and and so if it passes that that's a hell of a good vote that's
18:38
right I just want to get an Applause for that that's right that's right that's right um yeah thank you and
18:46
and I see there are like you said the gurus or the influencers out there on
18:51
social media that are pushing 100% um seller note uh by these
18:57
businesses and some of the younger Generations they have savings they have
19:03
they have 401ks and they're cashing it all in to pay as much to the seller and
19:10
then put the rest on a seller note and discount going to the bank for any money please don't do that please don't
19:18
do that um it's just absolutely yeah it makes no sense I mean there's a couple
19:24
things that you shouldn't do right you shouldn't pay all cash for a business even if you it unless you get a massive
19:29
discount and you shouldn't discount leverage because that's going to allow you more money to Market and grow the
19:36
business so just do this in a good prudent way and there are facilities and resources that allow you to do that
19:42
that's right yeah for some reason my screen is frozen and you look terrific
19:47
but you because you froze straight on got the headband got the headband here the laugh yeah you're Frozen for a
19:53
second but oh it's coming back there we go yes it must be a gremlin in my um
19:59
uh but usually when my screen freezes it's like a you got a at least my voice is still here I
20:06
should have a an AI Avatar of me in this black window wouldn't that be cool yeah
20:11
absolutely I'm afraid what an AI Avatar of me would look like oh what the heck my you know I'm going
20:17
to maybe uh well I'll keep talking okay yeah absolutely yeah so I Know You Can't
20:22
See Me Maybe CA can send me a chat here to tell me what it is that I need to do and exactly again why ladies and
20:29
gentlemen you need brilliant beam media to be help you out to help you out
20:35
because I wouldn't know what to do I'm willing to bet this is not on beam media I'm willing to bet this is something on
20:40
your side 100% I think so I think so what do you Deb tell us about this um
20:46
inquiry someone had related to four Nationals and the SBA because I have no insight into that um I'm going to switch
20:53
my camera real quick here I think that's what I can do let me try this
20:58
if this works there we go there we go there we go looking good oh no I'm gonna there you gone
21:05
gone I'm just gonna go with this there we go looks terrific okay so um foreign
21:11
Nationals um as long as you have a green card and it's all verified in the
21:17
systems um the you know the um government systems there is a form that
21:23
your SBA lender has that's an SBA form that needs to be uh complet deleted
21:28
signed notorized um yes uh as long as you have a green card you can apply for
21:35
SBA not a not so a green card not a um not a a resident alien it's an actual
21:40
green card yes okay correct all right okay got it okay terrific yeah um we got another
21:49
question here did you say seea I'm just looking at the chat here oh yeah who was it that was James Patrick thank you Mr
21:56
James Patrick I believe soaring profits is in the house would that be correct oh
22:03
and I like the way he spells it soaring profits p r o p h ETS yeah nice that's
22:08
another great um uh live stream podcast show and I am will be a guest on that
22:15
show coming up I think in a couple of weeks so um anyone want to marry a
22:22
Canadian IO that's where Richard's from hey come Onre all and I've got to say
22:27
thank you to I see it on the right hand side you know um a lot of familiar names
22:32
of uh people that have over the years purchased our course on buying businesses and saying hi and some of
22:38
these names are being triggered from from recent and and past years so hello everybody and and it's uh wonderful to
22:45
have you I appreciate the uh the kind comments and the regards it's great I agree um Rael is here thank you for your
22:53
sweet comments and supporting us I see that as well Mike asherbranner from
22:58
the hounds business Community Richard you need to consider joining that Community um I'd say the hounds business
23:06
Community HS a business Community they're all taking notes taking I'm taking I'm gonna send you a link you
23:12
will love it it's a great group we work together and we support each other um
23:17
there he is perfect got it that's the leader the founder of the hounds Mike uh
23:23
he teaches kiding Garden skills of how to network oh perfect okay yeah I'm not
23:29
very good at networking so no that that that'll be that'll be helpful that'll be perfect thank you what are you seeing by
23:34
the way I wanted to ask you when you're you know I hear mixed stories related to SBA activity up and down and based on
23:41
interest rates because I I see it through a very um different lens maybe um as opposed to not you but as opposed
23:49
to you know pure lenders because of the interest rates and the impact that they have tell me what you're seeing as far
23:55
as number of applications or what you if you have any insight to what maybe the overall SBA is or SBA lenders are seeing
24:01
a number of applications are there people you know um prepping themselves at the idea of of you know we interest
24:08
because I guess it's now Wall Street prime plus so it gets to gets to 11 plus percent it
24:14
does so let's go back to:24:20
Prime Richard zero I think at one point for a while there yeah um so the s
24:28
ba uh loans that are financed by Banks doing business acquisition
24:36
financing um generally will be on a variable interest rate when you buy a
24:42
business okay so variable we all heard about variable home equity loans back in
24:47
2008 the market crashed and then everybody's rates went up and forclosures were
24:53
t if you bought a business in:24:58
probably was it was it's generally prime plus a spread of 2.75% that the banks will will charge so
25:06
you probably bought a business at two two and three qus percent uh maybe 4
25:11
perc if the rate C came up a little bit the prime rate well today prime rate is
25:17
eight and a half percent I believe Wall Street Journal prime rate is eight and a half yeah eight and a half yes correct
25:22
at 2.75 you're buying a business 11 and a half percent or so somewhere
25:29
where everyone that is listening needs to understand it's the business
25:36
Cashflow reported to the IRS that's the key reported to the IRS right that
25:42
supports your SBA loan project payment if you take over ownership and the
25:50
business continues to operate as is and produce those same profits as it has historically so don't let the interest
25:58
rate scare you as a business buyer because it is well it is high I'd be
26:04
scared too but if the business can afford it and it's the it's a variable interest rate if and when rates come
26:12
down now your rate on your loan is going to come down and your your principal and
26:18
interest payment is going to be less so you're going to have more profits going to the business onto the balance sheet
26:24
building value okay so um it is slower today Richard as far as
26:32
activity not So Much by business buyers but by business
26:39
sellers why they the sellers will not recognize the fact that the cost of
26:45
money for buyers is higher today and if the cost of money is higher they got to
26:52
come down in their price to meet the cost of funds today and um we're a year
26:57
into this High interest rate environment so my hope is and I'm starting to see
27:03
some sellers are like is this rate ever gonna come down I don't know right we
27:09
got an El election year next year I don't think anything's going to change for a good year and if it does I don't
27:15
think it's gonna be drastic I Wrong well you know we don't we don't you have more
27:20
insight certainly than I do we don't don't predict but you know interest rates in mortgages I mean for many years were this was you know five six seven
27:27
eight % was was pretty normal I mean I did a back of the napkin um calculation
27:33
you know and typically at 11 at 11 plus percent you have about $160,000 a year
27:38
um of you know principal and interest over the course of the loan well at 6% you had 135 so the difference right
27:45
you're talking about about let's let's talk about about $30,000 of difference between a 6% SBA loan and and a an 11
27:53
and a half% SBA loan and and I just went through this uh recently with a buyer
27:58
and walk them through the comparison say you know that's what you're talking about on a million dollars right you're
28:04
talking about 30 to $40,000 per year Debt Service and there's so many ways to
28:09
get around this number one mentally I mean if you're going to get into business there's always an element of risk you have to understand sometimes
28:15
you might just need to take a step back with what the income that's being thrown off um and what you're going to be able to put into your pocket after Debt
28:22
Service and if if that becomes too slim the other way is you use alternate methods to help bridge the gap with for
28:28
example you know I did the the math where I took a million dollar loan and 700,000 was an SBA and the seller note
28:36
was um if you if the seller note goes to $300,000 and you could negotiate where
28:42
you just pay interest only on the seller note for the first year or two until there's an adjustment downwards in in
28:49
you know the variable rate comes down in interest rates well if you take the seller note on 300,000 and you pay them
28:54
like I think it's about 6% and you pay pay the higher uh rate on the SBA loan
29:00
you you you you come back to the total amount that you would have normally paid anyways except you're you're only paying
29:06
interest and so you're not your your debt service is not costing you any more money than it would have before right
29:14
you could also get a holiday where you don't pay the note for a year so you can't let interest rates get in your way
29:20
unless they're 20% I get it but the seller has to contribute they lower the price they could provide a note there
29:26
could be Hol a holiday from from the note Etc that should not prevent people from moving the deal forward you just
29:33
have to get participation from from other you know typically from the seller
29:38
right and that could be and now someone uh by the way asked what the approval rate is on SBA Loans and I'm not sure if
29:45
they meant approval rate related to the buyers or the sellers but um maybe you could um lean into that a little bit
29:53
yeah thanks Graham Stephen nice to see you here um Graham does business
29:58
valuations uh he's got a um he's an artist so he's an artist he might be a good guest for us one day in the future
30:05
here and get him on the show perfect to talk about business valuations but um so
30:10
this this question could be answered to two ways um typical approval rates for
30:16
SBA loan applications I'm going to spin that first with this answer that all depends
30:23
upon who are you talking to to get the SBA loan and for
30:28
example um I just delivered a commitment letter last week for a fella that's
30:34
buying a business down in Florida for 1.5 million it's um an electrical
30:40
lighting company they they put lights in all the pools in Florida in your neck of the woods Richard maybe beautiful maybe
30:47
you got some lights in your pool I have a light in my pool actually my light in my the actual mainl in my pool went off
30:53
in uh stopped working in September of 200 and five I just haven't gotten
30:58
around to fixing it I might have a referral for you I got a referral only about 18 years we got lots of lights in
31:03
the back right but the actual light in the pool is about eight it's been off for about 18 years well his business is
31:09
he will transfer in to this business it's been around for 15 years and it's been profitable we're funding on
31:16
December 15th knock on wood so exciting wow yeah so to answer Graham's question
31:21
you know the approval rates really depends upon who are you working with as far as
31:28
credibility reputation experience the qualified like we were talking about
31:33
earlier how many times has somebody walked through the fire with SBA funding
31:38
on business Acquisitions let me tell you I've been doing this for 20 years I've
31:43
made a lot of mistakes and I've learned from them I take ownership when I make mistakes but that's what makes me grow
31:49
Richard and um if you're working with somebody that's been through the fire they are the ones that are qualified to
31:55
take you to the finish line this fella called three different banks on his own
32:02
to get feedback if he was qualified for the SBA on this particular business
32:07
listing he was told no three times came to me I took it to two of my SBA lenders
32:15
and here's where the magic lies um my SBA Partners who I work with they know
32:21
that I've got knowledge I'm not trying to be boastful it's just called she's walked through the fire you can V
32:27
because you're really good at what you do so if you don't boast I'll boast for you oh thank you but when when you've
32:32
been when you've walked through the fire and you've been burned and you learned you just get better and better as time
32:38
goes by so he contacted me and I reached out to two Banks one was a non-bank
32:43
lender they said no real good lender they say yes to some deals that other Banks say no reached out to another bank
32:50
they said yes and I even told the front-end lender can you take it to your chief of credit just to confirm that yes
32:59
a little bit more for me because there were just too many NOS right commitment commitment letter delivered and we
33:05
funding on on the 15th so Graham I hope that answers your questions regarding
33:11
approval rates there really is no Rhyme or Reason Richard do you know how many
33:16
people probably leaned on their business broker that's selling the business one
33:22
second when you said there's no Rhyme or Reason for so you saying there's no Rhyme or Reason for like the rates who
33:28
gets well there is Rhyme or Reason but I guess it's lender specific right lender specific yeah and what about someone
33:33
asking you know there they were asking about um are there sector specific areas because I know in my experience and and
33:40
having done a number of transactions with SBA Loans were involved we started seeing a lot more where there's certain
33:46
sectors for example you know restaurants where they wanted to know you had restaurant specific experience um or
33:52
there's sectors where there's licensing and I know they've there's some criteria now that allow the the seller the license to the seller the current owner
33:59
of the business to qualify the business for the next owner related to licensing but by and large there's no outside of
34:06
probably like you know the drug industry and porn I'm sure there's you know there's really no
34:12
restrictions they they look at whatever right I mean there's there's there's no industries that they've ruled off the
34:17
table completely so what I want everyone to take away from all of your statements
34:23
there and question every Bank has their own in-house credit policies every bank
34:31
that lends on these deals has their own industry appetites every Bank out there
34:38
has a SBA loan portfolio that's on the books and either performing or
34:45
struggling and there are a lot of struggles happening right now in today's market especially with the increased
34:50
interest rates that is changing on The Daily you could call a bank today
34:57
and be told no regarding a specific industry and then possibly four months
35:02
from now maybe that industry is performing better in their portfolio and now the decision makers are saying well
35:09
we'll open up the gates a bit on this industry think I I think back to my time working at the various Banks Wells Fargo
35:15
for interest for for instance they would Finance restaurants but they wanted you
35:21
to have 50 as in 5 Z 50% down as the business buyer if you wanted to purchase
35:27
finance and establish business I can call some of my other bank partners and 10% down is typically um the minimum
35:35
required down payment and that's sbop qualified on a restaurant and I have
35:41
some lenders that will do that we could even go 5 perc down if the seller is willing to carry back 5% of that 10% uh
35:49
down payment so no Rhyme or Reason hence why buyers really need to pull in a
35:59
partner that has access to the different SBA lenders where number one they're
36:06
going to pick up the phone when they know Deb Curtis is calling because she's got a package of a buyer that's
36:13
qualified and she knows that this business the buyer wants to purchase is Cash flowing because she demanded to see
36:20
the tax returns I get people picking up the phone if you're Richard Parker and you're buying a business and you're just
36:26
calling A lender at random depending upon if they're transactional lazy tired
36:33
lack of experience you don't know what you're gonna get Richard yeah they're not picking up the phone and one of the things you know I'm going to give a a
36:40
Shameless plug for you because you know i' I've dealt with tons of SBA lenders
36:45
business brokers and I do some U lower Market uh m&a work myself you know and
36:52
and and part of the problem in this whole industry was not all but a disproportionate percentage you know of
36:59
of of of Brokers may be pushing a buyer towards a certain lender where there may be some compensation and that's their
37:04
business but everybody has their expertise there's lots of stakeholders in the business buying process and everybody has their expertise and one of
37:11
the things you know that I I absolutely adore about you is that your heart's in the right place and hopefully I'll make
37:18
you blush a little bit your heart your heart's in the right place and there there's a massive Advantage for an
37:23
individual to be able to come to someone like yourself and be able and you'll be able to look and say you you know which
37:29
lenders are uh potential candidates for this particular business this particular individual because you see the you know
37:36
the the pluses and minuses with with both entities the individual and the business because it becomes very
37:41
frustrating you know one thing that I've always encouraged people to do in our course when they you know when they look for for financing is first of all do it
37:48
early right don't don't wait till the last minute to you have a a deal in place you want to start reaching out um
37:54
as early as possible to understand what's involved but if you start going bank to bank it
37:59
become very frustrating because the reality is and I've seen it happen where you could speak to you get two different
38:04
answers from two different people at the same bank and so you know and and and
38:09
unfortunately that situation exists so being able to funnel something you know all of that to an individual like
38:16
yourself who above everything else is going to do right by people and you know so encourage people you really if you're
38:22
going to go down the road it's well worth it to you know to join hands with some like Deb because she'll she'll make
38:27
your life a hell of a lot easier you'll have a good laugh along the way and she knows her stuff I mean so and that's really important because if not it's you
38:34
know buying a business isn't difficult it's just complicated and this is like another piece that becomes very very
38:39
complicated so thank you for that you're you're course kind gentleman um and I'd
38:45
like to toss it right back to you to maybe share with our listeners about your courses and and what what it is
38:51
that you offer um and then maybe we can talk about um the the top things sellers
38:57
don't tell you and see you can pop that up for us if anybody's interested why don't you give us a little feedback on
39:02
that Richard sure and and one thing I want to tell everybody we um Deb and I put together a report on 10 things
39:08
sellers won't tell you and um there's a QR code and we'll put in the link as well but you can get that reported down
39:15
get it in an email with a download link it's 10 uh 10 critical elements I think it's about 40 pages it's if I do say so
39:22
myself it's really well written and very helpful and um covers a lot of things you're just not going to hear directly
39:28
from the seller or they're going to tell you something and um it's not it's going to be something else for example you
39:33
know um growth opportunities key employees that will stay if they have issues related to customer concentration
39:39
which is a massive problem in a substantial amount of small businesses
39:45
outside of retail and by that customer concentration we mean when a disproportionate number amount of the
39:50
business comes from a very few number of customers and that's very common in
39:57
small businesses and they you know sellers will typically tell you that oh you have nothing to worry about so and
40:03
so will keep buying from you and so well you need to you need to examine that because if that doesn't prove to be true
40:10
the entire business can change and I know we had the individual who does the business valuation Graham I think you
40:16
gram and you know he would certainly understand this if you have a business that's throw that's doing $5 million a
40:23
year and making a million dollars a year and you have a a a a very uh uh high percentage of customer concentration and
40:30
if that customer disappears that business can now be doing you know making $400,000 a year and those are two
40:36
completely separate valuations and very often the seller will tell you yeah you have nothing to worry about well you need to investigate that and you need to
40:42
get confirmation and you may not be able to get confirmation from the client because the seller does not want you to
40:48
speak to that client because they're worried if the clients find out that they're selling the business then
40:53
they'll go somewhere else and so you have to develop a a um a deal that
40:59
carves out that client and puts them into a bucket of an earnout in other words the business does makes a million
41:05
dollars of profit I'm going to give you some rough numbers so Graham don't don't jump up and down because I'm just going to do this for math business makes a
41:11
million dollars year and you determine it's worth $5 million so it's a five times multiple well without that customer right that business makes
41:18
400,000 so that becomes a two a $2 million business at a five times multiple that difference between those
41:24
two that's the earnout so if that customer continues to buy after a year
41:30
or two that you run the business the seller earns the rest of the purchase price they're pretty dramatic numbers
41:36
it's usually not that large but it gives will give people some a sense for some context of the impact of customer
41:42
concentration there's the other parts of it of you know key employees whether or not they're going to stay or not stay
41:49
and so you know when you go through this it's it's it's well worth the read um it it it'll be very very insightful and we
41:55
you know I run into to these things all the time with Buyers where you know most businesses when you're buying an existing business they're going to have
42:01
warts they're going to have blemishes they're going to have problems there's nothing perfect so you want to mitigate what's really problematic you don't want
42:07
to turn incidents into catastrophes because the beauty of buying a good existing business is you get the keys on
42:13
Monday and you could take a paycheck on Friday right versus a startup which is a beautiful thing right but there's going
42:20
to be some problems so you have to you have to solve for those and you have to go through this methodically because
42:25
it's not it's not unless it's material the seller and the
42:30
representatives either legally or just by Nature I'm not going to tell you they may they may they may but there
42:38
there's no guarantee and there's no requirement in most cases unless it's material and so the buyer has to do
42:44
their due diligence in a good good way that's right I I like to add to that a
42:49
true story this happened a couple years ago I had a young man um purchase
42:54
finance a commercial C cleaning company very profitable just doing well longtime
43:01
company and the seller the owner was a a woman a female okay we did all of our
43:08
due diligence checked you know the receivables and all that I have a feeling I know what's coming here okay go ahead oh my
43:14
goodness nowhere along the line and um and this is one of the this is an area
43:20
why experience you you want to engage somebody that's been through the fire they're the ones that are qualified
43:26
because I learned a lesson really hard on this one the attorney didn't even catch it business buyers engage
43:32
attorneys to help with due diligence sometimes they engage good ones yes so
43:37
my my buyer was a male and the seller was a woman beautiful commercial
43:43
cleaning company he was so excited it was approved getting ready to close and we did close and fund but nowhere along
43:51
the line did she disclose she was a woman certified business and
43:56
her customers only wanted to work with minority owned businesses knew that was
44:02
100% see it frequently oh man so it was a bit of a a back and forth workaround
44:09
with and the business broker didn't even disclose it okay do you think the
44:14
business broker should look for that Richard do I mean now I know to look for it if it's a woman that's selling or a
44:21
veteran what what are the who are the what question so I would answer to you
44:28
this way I would say that anybody who's been in the world of business brokerage for any amount of time would most would
44:34
know to ask that question can I guarantee that they all would no but they would know to ask that question
44:40
because it does surface and as you were talking about I was noding my head and I hate to you know be the Assumption guy
44:46
but I knew exactly what was coming because I've seen it before yeah okay and so because then sometimes they get
44:51
favorable terms or they have to re there's certain County or or um governmental agencies that are you know
44:59
they give favorable treatment to minority and women-owned businesses and so if they're some of these related to contracts they would get favorable
45:05
treatment in the bidding process so I knew exactly what was coming so in your question should they should they have disclosed it if the broker knew it knew
45:13
this then I I would like to say with confidence that yes they will disclose it because the reality is you know very
45:20
very rarely do surprises not surface so any decent broker would absolutely let
45:26
it be known because if not they're all liable especially if they knew about it right yeah the problem is if you're
45:31
dealing with an you can't fault a seller they just knew this is the way they do business so they didn't even probably
45:36
think about this right they didn't even know that it was advantageous or maybe they they you know they they didn't hide
45:41
anything but they didn't put forth the information because they probably didn't know um that it was that um uh
45:47
influential on the purchase price or or or on the actual fundamentals of the business a business broker hopefully
45:53
would disclose it and if any broker has been in this this business long enough and I'm when I say long enough a few
45:59
years you would know that type of stuff comes up and you have to know to to ask for those things but it's incumbent upon
46:06
the buyer to uncover them that's that's where this becomes really almost unfortunate right because no track
46:14
record if you don't have the resources behind you and the information behind you and I appreciate you mentioned earlier about our course which sold over
46:20
100,000 copies of these takes people through the whole process and so those you know those are the type of things that you want to that we point out that
46:27
you want to look for in due diligence and Graham by the way um just to revert for a second put up a note related to
46:33
valuation which thank you Graham talking about a pragmatic view related to earn outs and customer concentration one of
46:39
the things he said was um you know you take you know a question to ask the seller what percentage of Revenue do
46:45
your top three clients represent I usually ask three to five or in a very open-ended question to say give me a
46:51
breakdown of your top 10 clients I don't need to know their names client number one client number two client number three through to 10 and what percentage
46:57
of the business have they represented over the course of the last three years and if they've changed um so that's a a
47:03
very good way to pose that question and um extract that information so these are all things that you know the and you
47:10
know what de the example that you gave about the woman-owned business or the minority owned business we're talking about concentration the nice thing about
47:16
doing this every week is there's like about and I'm not trying to exaggerate there's about a billion more examples of
47:21
these things right you know which is which makes our industry fun can I tell you another story about this same buyer
47:28
of course he this this was business number two commercial cleaning company
47:34
the first one that we had approved for him it was a male commercial a male
47:39
owner selling his commercial cleaning business this is rare that this ever happens Richard but it did this time the
47:47
seller got cold feet and 10 days before closing changed his mind and didn't want
47:54
to sell the business sellers remorse happens almost as frequently as buyer remorse so think about it my client we
48:01
were shocked we we the broker was shocked the first round we the first business he put in all this money into
48:08
buying the business the valuation the time the due diligence the
48:13
seller got cold feet and just wouldn't return anybody's calls or show up at closing so then we quickly moved to the
48:19
second business that was women-owned and then after it was funded found out clients were walking away but it all
48:26
came together so it all worked out and the nice thing is when you know sometimes when there's a lost deal for a buyer or especially for a buyer if
48:33
they've gone down the road with a ve with a specific type of business if they're able to get into you know find
48:38
another one in that sector that's um you know that they they can potentially acquire a lot of the initial research is
48:45
already done for them right they did it on the last business but sellers remorse is very common maybe in our next show we can touch upon that um a little bit
48:52
related to the seller side of things because we certainly you know how you know buyer's best way you know to
48:58
interact with with the seller because that that piece is so important and and very often most you know most small-time
49:04
buyers or first-time buyers most of them are get panic stricken at the thought of having a a meeting with a seller and not
49:10
you know no don't know exactly what questions to ask or what to look for so probably be you know maybe we can pick out a few of those and and why they
49:16
should be asking those and and preparation for the seller meeting that's right and by no shape or form am
49:22
I trying to to scare anybody that wants to buy a business because a lot of what
49:27
we talk about isn't the norm but it it's good to know to help you with your due
49:32
diligence when you're getting ready to buy a business um I want just shout out
49:37
to Graham he's heading heading heading off here soon he's on the over the pond
49:42
on on this other side of the world but does a great job with business valuation so Graham have a good night have a good
49:49
night um now we're we're down to 10 minutes here of the show um I'm what
49:56
should we we we we want to keep talking business buying banter every every
50:01
Thursday you're going to find us here live we Richard and I both agreed if you're interested in being a guest and
50:08
you want to talk about some of um what you may add as value to our listeners
50:16
simply DM um Richard or myself or reach out to us and uh we would love to
50:21
entertain adding some guests to our roster right Richard oh absolutely and certainly if there's any U you know
50:28
buyers who have gone through this process would be wonderful to hear your stories some of the challenges that
50:33
you've um you know that you've uh encountered along the way so industry experts whether it be someone like
50:38
Graham with uh you know um you know valuations or anyone's any accountants doing forensic accounting or uh
50:45
attorneys doing transactional work at this at this level we' you know we'd love to have you participate but certainly related to the buyers um that
50:52
would be great um you know and and and I think Deb your earlier point that you made just before you're talking about
50:57
potential guests when you're talking about you know not to scare anyone it buying a business I mentioned
51:04
earlier it's a difficult process but it's it's not difficult it's complicated and so when I mean complicated there's a
51:09
lot of various steps but they're all doable I mean I'm the poster boy I've bought 13 businesses and have a
51:15
co-investment in in a 14th and businesses ranging in value from $50,000 to $200 million I don't have a fancy
51:22
education I'm not sitting here to try blow blow smoke up my rear end with with accomplishments but I'm you know I'm I'm
51:27
the poster boy for it and I made a ton of mistakes you know at the beginning you and you can there's enough
51:33
information that you can avoid doing that but it's doable anybody can do this not everybody will but anybody can do
51:38
this it's not Beyond anybody's scope you just have to do it in a methodical way reducing all the steps like into into
51:45
into bite-sized pieces and you know I I tell buyers that the the two greatest
51:51
emotions that you have you should be excited and you should be scared excited excite excitement keeps you
51:58
going scared will force you to be diligent and so there are Peaks and valleys and I'm sure you've seen it
52:04
people you know they it's frustrating that the individual who lost the the commercial cleaning business the seller
52:10
backed out and then a then then it's a woman you know women's own business that had favorable treatment so that's enough
52:16
to knock you on your ass a little bit but if you a true entrepreneur those are like just bugs on the windshield of life
52:22
right you just dust yourself off because that's the world of entrepreneur and if you you have to get used to that sort of
52:29
those challenges and failures because there's very few entrepreneurs that have
52:34
that started out and their first Venture was Uber successful most of them failed a bunch of times so you just don't want
52:41
to make you're going to make mistakes you just don't want to make big ones and you do your best to mitigate the big ones but that's the world of
52:47
Entrepreneurship the flip side of it is it's unbelievable how exciting it is and fascinating and it comes with ongoing
52:54
heartburn I think you would and I a while ago were talking said you know I can't even remember how many times like I went to bed on a Monday night and you
52:59
know how the hell am I going to make payroll on Friday in one of my businesses and that's just like it's just part of it right you get used to it
53:06
and and you and you become stronger and and better for it oh man I love everything that you just said there in
53:12
these closing comments Richard that just resonated with me deeply and and if you
53:18
are a buyer you want to do it with Partners Like Richard or myself that are the qualified that have walked through
53:24
the fire time and time again 30 years each of us what we got 60 years together
53:30
of we're old right I tell people we're old I tell people I'm not that smart I'm just
53:36
old it's just the aggregation of information along the way I I've learned
53:41
um representing buyers sourcing SBA Loans um a good chief of credit of mine
53:48
from from a bank of past time I nicknamed him and I as the curveball
53:55
catchers because every deal brings curveballs and iare my buyers from the
54:02
Geto you know just just be ready this is like you said this is entrepreneurship
54:07
life curveballs happen but we catch them and we find a solution that's that's
54:13
what it's all about that's what we do we we pivot we adapt um that that's exactly
54:19
what we do that's what we do um so next week we we will have another
54:25
episode um I I would like to maybe give a special thanks again to our sponsors
54:30
and and have put them up on on the board again um brilliant beam media CA is the
54:37
one behind the scenes here thank CIA how about a drum roll or something yeah give
54:42
us some give us some music CA what do you got for us there we
54:49
go had a little different than mine but that worked oh okay F fine fine I always
54:56
think about the Family Guy episode when I hear that about Peter Griffin talking about walking behind the fat person with
55:01
a tuba I know that's not politically correct but he had that whole episode when he's walking so he said that that's what he wanted as his job to walk
55:09
behind sorry like that's just well well only because you guys are
55:15
a dream to work with here's my my mine for you okay oh that's like fairy dust I like that
55:23
that's what we're going to do we're going to sprinkle fairy dust people and get them to the Finish Line yeah oh I have to say hi I see Terry Smith is in
55:29
the chat is that the Terry Smith I play hockey with no I don't know but he he's
55:35
awesome he's on LinkedIn everybody should connect with him um uh Terry
55:40
Smith it is a business advisor he helps people with business financials growing
55:47
in my opinion anybody that's a business advisor a business coach of some sort
55:53
when I see their business business financials the tax returns as a seller that the the the business that engaged
56:00
the business adviser like Terry Smith nine times out of 10 that business is going to sell and be approved for
56:06
financing because the owner saw value in engaging in the right coaches and
56:13
mentors to support them all the time it's the owners that want to do it all on their own that fail and expense their
56:21
Tesla that's sitting in their parking lot by the front door of their business well we can go we actually do a whole
56:27
thing related to unreported income because that's a perfect topic and I like uh I think Terry posted something
56:32
by the way no risk uh no you know no risk no reward but I think the you know one of the subject matters that we'll
56:37
cover is related to unreported income or you know the this the laundry LIF list of ads adbs and um you know yeah it's
56:45
dangerous U you I saw Anthony um Wilson posted a thank you and and welcome that if you don't know Anthony he was one of
56:52
uh one of my first clients his his dad was one of my my first clients he actually um started off made an
56:58
investment $30,000 into a candy store in in Oklahoma and built a multi-million
57:03
dollar Empire his him and Anthony I I I interviewed them if you will via Zoom um
57:09
for our for one of our websites they're gonna their whole uh the whole interview is going to get posted shortly but they
57:14
actually used our course and and and the and Anthony I mean he's an his dad's
57:20
really impressive Anthony is unbelievable I mean he's really taken the torch and he's he's a brilliant guy
57:25
and I I believe he told me that he he won the um you know top 40 under 40 in
57:31
in in western Florida like in the Tampa area um so thank you Anthony for joining us and uh those are those are great
57:38
stories maybe one day we'll have those guys on because it's a your tag team father and son and their stories are
57:43
just just fantastic there's there's money and sugar there's money and sugar and even if there's not money there's
57:49
sugar and sugar you know it I got a shout out I see Crystal Lloyd is here
57:54
she's an SBA lender uh with veritex Bank in the big state of Texas see you that's
58:01
your neighborhood Crystal Lloyd and um one of her leaders at the bank is an old
58:07
chief of credit of mine his name is Kirk B he's one of the best SBA chief of
58:14
credits leaders in the country by far um so uh thank you for showing up Crystal
58:21
tell tell Kirk I said hi um so many s in the chat here yeah Dr Dr trong thank you
58:28
so much hun for being here Terry Smith Graham so Donson by the way there's
58:35
that's Anthony's dad yeah I love it yeah and Anthony said he's actually under contract now for a business is going
58:41
through SBA so they're uh um you know we we got a terrific selection of
58:46
individuals thank you everybody who joined today and and certainly any feedback we're new at this we're very
58:52
excited about the subject matter um and and I'm thrilled to share it in any way we can but if there you have any
58:58
feedback what we could be doing better or subjects you want to um cover but certainly anything that you uh believe
59:04
from format or otherwise that we could uh improve upon please your uh your criticism is welcome Deb has got skin as
59:11
thick as a Buick and if you want to know why just go read her background and her upbringing and her story which I
59:16
encourage everybody to read with her and her Poppy and her dad the story will bring will'll bring uh bring a tears to
59:22
your eyes but you'll understand she's got grip so um any criticism is is going to be taken very well and I'm uh doesn't
59:29
phase me at all so we look forward to that Deb you're did best I appreciate you you getting this organized and and
59:36
love doing this with you well Richard thank you I it was a divine intervention
59:41
headbands and handkerchiefs baby show me what you got here's what I got here's what I got and I'm not waving the
59:47
flag until next time ladies and gentlemen make sure you mark your calendars next week Thursday 2 p.m. Sun
59:54
centr and please if you no 2 pm Eastern Eastern thank you 2 p.m Eastern please
59:59
spread the word to your friends as well because um we're all in this together and and we should always be learning to
::be earning Amen to that see you later see you
::[Music]
::later