Astute Insights #1 Mick Godwin, Business Broker
For episode 1 of Astute Insights, Soonah chats with Mick Godwin, business broker and sales strategist. They discuss the common misconceptions on selling or not selling your business.
Soonah: Welcome to Astute Insights. The overview of what I wanted to do today was to put together a series of interviews with business connections that I’ve made over my career that have helped me to grow and shape my business into what it is today.
And today I wanted to introduce people to leaders in their industry that give us insights and strategies for improvement. And today I’d like to introduce Mick Godwin. Mick Godwin is a Sales Strategist. He is a Business Broker that helps business owners like you and me to prepare and position their business for sale. So as to achieve the best possible price in good time, without stress. Welcome, Mick.
Mick: Thanks, Soonah. Great to be here.
Soonah: Awesome. The reason I kind of wanted to bring you in today is with the global pandemic. I’ve seen a lot of business owners sort of question why they’re in business, looking to exit their business. Not really being able to sell it during this time or thinking that they can’t. So I wanted to put a discussion point over to you about the current market and the misconceptions around selling or not selling during this time.
Mick: Yeah, sure. Fantastic. So, the current market, well… Okay sorry, let me just start with the current market.
Mick: Look, there was definitely a drop that everyone knows and everyone pulled back and wanted to see what was happening. A lot of people ran, deals collapsed. That probably happened more so just with unknown factor, not necessarily the businesses not being attractive anymore.
Once the unknown factor, we got passed that after a few weeks, a lot of it started to be business as usual. Now we did get a lot of buyers circling. Looking for bargains of the century and a lot of sellers weren’t prepared to do that. We’ve seen some businesses went really, really strong that sort of maybe didn’t realize that was going to happen.
A lot of the bakeries, a lot of the small food retailers…They’re seeing continued sales that they’ve never been seen before in their whole years of business. We have seen a lot of landscaping or home improvements business going on and just a lot with the business in general from a sort of, I wouldn’t say luxuries, but your camper vans, your trailers, maybe the cars. People are getting in more cases, a lot more money than what they were used to getting and they’re actually spending it…
Now in terms of sales point of view, buying inquiries are back to normal. Businesses are listing with confidence. Look, we sort of know the situation of COVID now, we know what’s going to happen… I’ve got a holiday management rights, booked up a 100% up in Airlie beaches and places like that, that used to rely on international travel. So, in terms of, everything that’s in dire straits? No, but that’s definitely not the case, but I think we’re going to be setting up to paying a lot higher taxes for a long time to come to cope with that.
Soonah: I definitely don’t want to even think so. I also wanted to ask you, when businesses come to you, they’re probably not at the point that they should be when they’re looking to sell their business. And one of the processes that you talk about and it’s on your website is getting sales ready. So, do you want to share with us sort of your top three tips on how businesses can start to prepare their business for that sales process?
Mick: Unfortunately a lot of the business, especially with businesses that might sell for around 500 or less, even up to a million. They always generally sell at the wrong time. They sell when they need to get out or they’re really wanting to get out and that’s the worst time to sell. But in terms of what you can do for your business to create a lot of more value and have yourself in a lot better position when it comes to selling, is your number one is your systems and processes.
Now if you’ve got your right systems and processes throughout your business, the business is far less reliant on you. Meaning when it comes down to everything from buyer confidence, what are they buying? As soon as the owner leaves is the business going to fall apart?
No, because the buyer sees that the business is operating really without that owner already. It gives a lot more consistency in the terms of the output… If they’re getting from you that same output already without the owner overlooking and doing everything, it improves every asset of the business from output to revenue streams, to consistency in sales.
So, that’s the biggest number one tip. And that doesn’t have to be huge, huge, detailed systems… The next one is your numbers. Get your numbers clear and in place. So, that’s where teams like bookkeeping can come in and really understand them because accountants, you got to think, you’re not selling to the buyer, it’s down to the buyer’s accountant and their teams.
Soonah: And I think if you can have less resistance from the buyer, less questions coming back, I think it improves your… I don’t know, the level of confidence that they have within your numbers. I think the more questions that go back and forth between the two accountants kind of decreases the value of your business.
Mick: It starts eroding confidence. And when it starts to erode the confidence, people pull out and deals fall over. Part of my job is to make sure that businesses are ready and there is no resistance or pushback or questions back and forth. Everything’s there for them. So once we find that buyer who’s really interested and committed, we’re just free flowing everything that they want to see and hear before they realize they want to see and hear it… The numbers are the huge one because if the numbers are all really clear, their accountant will understand this and he’ll agree whether it’s a A$100,000 business or A$500,000 or a million, whatever it is.
Mick: And third.
Soonah: Third. Let’s do number three then.
Mick: It was your team… like a lot of that is crossover with your systems. If you have a system where you can place your team, they have maybe some kind of final online selection. Self-selecting service, I call it, where they select themselves. Again-
Soonah: Yeah, or continuity with the business, even if the business does change hands there’s the same ethics, the same kind of… Where the direction of the business was… And that will change, I guess, depending on the owners coming in, might move it a little bit but at least they’re buying that group of employees that I guess are on the same path.
Mick: That’s exactly it. Yeah. And it’s up to them to make small changes if they want, but they know what they’re getting.
Soonah: That’s interesting. Talking about your systems and processes, is there a part of your business that you have successfully outsourced and the benefits that it may have created for your business?
Mick: Yeah, definitely. I’ve broke and implemented a lot of the systems myself in my previous business, but I’m not a great tech guy. So, when it comes to systems on the digital scope of calendar bookings and sending out newsletter-
Mick: Yeah, all that sort of digital automation stuff, but the key is to sort of keep it, so it’s a little bit personalized still because I think automation has swung too far.
Soonah: I think of those invites on LinkedIn, “Hey, we have the same.” And it just fires back a very generic response too.
Mick: Exactly right, yeah. The biggest way to turn off a business owner, if you want to sell them businesses is give me a generic, “Hi, I can sell your business,” like their secondhand car or something.
Soonah: I know the background story of how you got into business broking, so do you want to give us a bit of journey on the business that you had and how you’ve transitioned into who you are today?
Mick: My previous business that I sold last year, which was 2019 and that was called YoFlow. And then we had a couple of retail stores, down in Byron Bay was the main one. We opened another store up in Newstead at the gasworks in Brisbane. And yeah, the base of those stores was food retailers. Frozen yogurt was the main self-serve model. Yeah, I basically systemized that business. Learnt a lot with the second store.
It really is two separate businesses if you don’t have your systems right. So, I was kind of running two businesses, two hours apart, which was a tough couple of years in that one. We worked through it and in the end I got the systems right. And I had no real need to be in the day-to-day of the business.
But I think after eight years, I just had done my race with that one. And I was really happy with what the business started at. I started the thing, I bought a machine online from China. It rocked up at my house and I plugged it in and I started… by the end of it all, it was ready to pass the baton on and selling it and-
Soonah: Was there an incident or situation that made you think that it was time to sell it, or it had just run its course?
Mick: No, there definitely was because it meant a lot to me, so it was a very hard one to come to wrap my head around. Obviously it takes time, but I think it was at the summer because especially in Byron, you’re selling frozen yogurt, you can imagine it’s a very profitable business and making lots of money and I just didn’t care. I needed the money but it just wasn’t fun anymore. My income, I made tens of thousands in a month and going, “Na.” So, I knew that was time.
Then I started the process…I looked at what would a buyer want? And I knew, okay so I had to get more lease time for the buyer to give them more confidence that they’ll still have a business in five, 10 years time. I looked at the systems. By that time, the systems were all pretty good. I’d replaced myself. And then what happened is we went down and I started speaking to different brokers and the discrepancy…
The difference in what one broker valuation and price would get me in towards another one was huge. One was 60% less than the other one and the third broker just asked me what I wanted to sell it for. So I just made up a number and he said, “Sure… It’d be nice if it did but…” So yeah, I started to really think that perhaps there’s a gap and with my practical experience of owning in my own business and I started my Masters in Business Admin and the academic and I just thought, There’s a way, there’s definitely a space here to offer a different service.
Soonah: Yeah, that was sort of my question. When you were looking to sell, did you, at that time, know what you were going to get into or you just knew you wanted to get out of what you were currently doing?
Mick: I knew I wanted to get out. That was definitely one, but I thought in a previous life, I’ve worked on boats and spent a lot of time sailing around the world and everything and I thought I could yacht brokerage or something like that… It just seems, guys that had never been on a boat in their life and just selling another… Just car salesman, not that they were car salesman, but that’s what it was.
Soonah: Well, essentially just a water car.
Mick: Exactly, yeah. It wasn’t too engaging or wasn’t too challenging, all you have to do is just talk to really wealthy people and that I thought, that’s just not what I wanted to do. Then I saw what happened with my business and the business broker that I dealt with. And I thought, well, I am going to study my MBA. I am going back to studying. I do like business and the dynamics of it. And there’s a lot more variety in business, so that was more of a challenging and more exciting path that I wanted to take.
Soonah: Okay, cool. I just wanted to share that because I thought it was interesting and I guess I wanted to know a little bit more. So, I’m going to sort of wrap up on our top three points and just go over them. So you had:
- Systemize your business
- Getting your numbers right in your business
- Integrating and making your team work for you.
The point that … the worst time to sell is when you need to sell, that just really struck it with me because that’s kind of what’s happened now. People don’t have… or businesses that I’ve seen that have approached me, they’ve said that they need to get out, they can’t afford to keep going. But their business isn’t worth anything because they’re not ready, so they’re kind of a little bit stuck. So, it definitely opens up the doors on what’s possible out there and that you can chip away. And I think, if you’re not in business to sell it at some point, why are you kind of in business.
Mick: Yeah, exactly.
Soonah: You’re essentially just a job that you’re going to walk away from rather than this saleable asset that you should be looking to create and build.
Mick: Yeah, I think that’s a very important one. I think the idea of an exit plan, exit strategy is just non-existent in so many business owners so, why not? It’s got to happen at some point.
Soonah: Yeah, and I like what you said that it’s hard. I think about my business as well and it’s come up over the years. When I’m ready to sell it, when it was, “Well, I have my kids or now my husband has his own business.” Is it at a point that I want to sell it? And it’s like I do want to sell a business, that’s why I got into it 12 years ago but it still pulls at my heartstrings that this is kind of like another one of my little babies. So, I think the process-
Mick: Yeah, it is because that’s what you want.
Soonah: Yeah, it will be there but it’s definitely not on the cards for me at the moment, but in the progression of building up the team so hopefully when the time comes, we’re ready.
Mick: Yeah, exactly. Yeah, that’s spot on there and you should always… Unforeseen things do happen and so if something should happen and someone has to jump in and maybe sell it or something, at least if you’re always sort of ready to sell, you’re going to win with the best bet. Yeah.
Soonah: Partially ready, yeah.
Mick: At least partially is better than none so, yeah.
Soonah: And best way for people to get in contact with you, if they want to have a chat to you.
Soonah: Keep it simple, I like it. I’m going to finish on some rapid fire questions. I don’t want you to think about the answer. I want you to say the first thing that pops into your head when I ask it. Okay, you ready?
Soonah: Latest book that you’re currently reading?
Mick: Wilbur Smith, When the Lion Feeds.
Soonah: First music CD you ever purchased?
Mick: Oh Damn by Vitalogy.
Soonah: Ah. Worst habit? No thinking.
Mick: Bear baps with my wife’s
Soonah: And you’re favorite thing about COVID?
Mick: Got a few waves to myself when it was locked down period.
Soonah: Awesome. Thanks for joining us today. It’s been great.
Mick: Great. Thanks Soonah. Fantastic.
Podcast Show Links
- Mick Godwin – Business Broker and Financial Strategist Website – https://mickgodwin.com.au/
- Mick Godwin Email Address – [email protected]
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