Business Coaching Secrets with Karl Bryan

BCS 159: In this episode, Karl answers questions about:

– Buying and Selling companies

And more…

Karl Bryan helps business coaches get clients. Period.

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EPISODE TRANSCRIPTION –
(transcription is auto-generated)

SFC 159
[00:00:00] Karl: Welcome to Business Coaching Secrets with Karl Bryan. If you wanna attract new high-end coaching clients, fill live events and build a wildly profitable coaching practice where business owners pay, stay, and refer, you’ve come to the right place. In this podcast, Karl provides his keys to the kingdom for finding and signing.
High paying clients and building the coaching business of your dreams. Here we go.
Welcome to Business Coaching Secrets, ladies and gentlemen. This is, Your boy road dog here. This is Karl Bryan, my boy Road dog couldn’t make it today. And I said, you know what, road dog, I got this one. Let me handle it. So here I am, folks handling it. All right, well, kind of excited to do this on my own.
What I’m gonna do we do an event every year in business coaching business coaching master. And we actually do some virtual business coaching masteries, which we just did one on reading financial statements, which I would have mentioned a few times. But anyway, so the, the event in Cancun.
What I did is I did a four hour presentation on a, it was a variety of topics, but a lot of, always try to come up with new content, right? Cause again, our clients tend to hear a lot of my q and A stuff, so I, you know, I gotta put together some new content. And one of the things that I talked about was, It was a lot to do with buying and selling companies and some of the things that I would be thinking about, right?
So it’s not, we’re business coaches, we’re more there to grow their companies. But I think with a film over top of being able to think about a company you could sell tomorrow, but you’d never want to sell it, like how cool would that be? Right? It’s kind of business you’d like to own and all your clients would like to own.
So that was kind of the, we’ll see how we go, but I’m gonna literally just rip through that present. And then yeah, I’m just gonna, I, I don’t really have a, I’m just gonna literally rip through the presentation when I see a slide that I think I should expand upon. I’m gonna talk about it and expand upon the topic and then I’ll just keep moving and I’ll ignore some and I’ll highlight some and we’ll see how it goes.
But that, this is just gonna be me and I’m gonna be riffing. So, and actually, road dog here, I got instructions from Road Dog, he said, because I’m not gonna be. He knows that I’m not gonna be very funny, which, a little bit insulting right road dog, what you do in shoots. But he said you gotta read a few of your jokes out.
Cause apparently when I read them to him, it’s significantly funnier than when he reads them himself. So, so there you go. So, The road dog sent me a few jokes. Mostly he loves dangerous Dave, so they’ve got dangerous Dave. So, so here it goes. I I’m just gonna read out a few jokes. I’m gonna do nothing more than sense how it is going with exactly zero feedback, which probably won’t.
can be pretty short, but we will take it from there. So here’s the first joke he sent me. Dangerous. Dave’s new girlfriend got mad at him for. Here’s their conversation. Little stars. He derives up date. I thought you said you had a Porsche. Dangerous Dave. What? No. What I said was I was poor. Shit. There you go.
I will you get it? So I was Porsche instead of Porsche. Okay. I like that one. There you go. That’s road’s first one. Okay, let’s see. Next joke. Dangerous. Dave is the kind of guy that not only dances like nobody’s watching, but he drinks as if he doesn’t have to work the next day. He was staying at a hotel and called the front desk for a wake up call, and here’s how the conversation went.
Dangerous. Dave. Hi. I need a wake up call front desk lady. You’re an alcoholic with broken relationships. Who’s ignoring those? That matter? Your whole life is falling apart. Dangerous, Dave. Thanks, . That’s that’s good. You get it right. Wake up call. Right? Wasn’t what he was expecting. Okay. What’s the next one here?
Oh, this one followed Nicely done shoots. This one follows, speaking of people potentially from Mars, when Dave, as for a wake up call, the front desk gal surprised him by saying, you’re an alcoholic, whose life is falling apart. His response, thanks. He’s a pretty smooth and influential guy. Here’s how the conversation with her actually ended.
Dangerous, Dave. Enough about. And my best qualities. Tell me more about you front desk lady. I’m very attracted the men of power dangerous. Dave, I just paid my light bill. There you go. It might be more funny for me than you, but anyway, let’s see how we’re doing. How am I doing? How we doing? I’m not so sure.
Oh. This is a bit morbid, but speaking of thinking outside the box, dangerous. Dave’s boss died last. At the open casket, he kneeled down beside the casket and whispered Who’s thinking outside the box now? Ooh, I’m gonna boo boo. Oh, here we go. Okay, I’m gonna end on this one. I’m gonna end on this one.
I’m not sure how this is going, but this is. This might be my favorite of all time. And I’ve got some that I really, really, the rival dad one, if you remember that one. I, oh my gosh, I laugh so hard at that one. But this isn’t the rival dad one, but I knocked this together. Like I, this, this just came to me and I was like, oh my gosh.
And I read it to my dad, and my dad kind of helps me edit these emails. Like I read ’em to ’em every night or most nights, and. Anyways, let’s see how it goes. Speaking of getting your ass kicked. Oh, not supposed to swear on this. Sorry. Dangerous. Dave and his new girlfriend had this conversation. Dangerous.
Dave. Taxation is theft girlfriend. Oh yeah. And nine 11 was an inside job. Dangerous, Dave. Oh heavens yes. Not to mention the virus was a total hoax girl. Bill Gates and Fauci are out to get us dangerous. Dave, I’m not boxed girlfriend. I’m banned from flying for three years. Dangerous. Dave, will you marry me?
So what I originally wrote that what I had is I had dangerous Dave saying, He was banned for three years. Right? But then I changed it and I thought like, that is a home run, right? Like, oh, you know, she was banned, replying for three years and he’s like, will you marry me? So now from those emails, he, they’re, they’re engaged.
So, so there you go. You know what, that might be a big fat led balloon. That might have been rather humorous for a few of you. Probably somewhere in the middle for all. But let me okay, so here’s what I’m, I’m opening up a presentation. This is four hours. I’m not gonna keep you here for four hours, I can assure you of that, but I’m gonna kind of craddle, I’m just gonna flip through guys and I’m gonna some slides that grab me.
And by the way, and, and really importantly, maybe for your own podcast, if you’re not doing one Guys, I, how I came up with this idea is that I would like to re, you know, I think I delivered some really good content in my four hour presentation in Cancun. And I learned a lot putting it together. And then I was thinking to myself recently, you know, I should really revisit some of that stuff just to make sure that it’s, it’s cemented in my mind, right?
So that road doll couldn’t show up to do, to do. I was like, you know what? Rather than, you know, sitting there and going through it myself, I’m gonna. You know, I’m gonna go through my own presentation and I’m gonna, this is gonna be me relearning material that I talked about and reinforcing some things, and hopefully passing on some learnings to you, which is my absolute goal.
But what I’m getting at is by running your own podcast you will learn more than the audience, and that is where the magic lies. So start your podcast. Quit. Get outta your head. Just make it happen. Okay. The problem with the world we tear down the losers. In fact, I wrote an email very recently saying that you know why on the podcast Road Dog asked me something to the effect of why do people tear down Bill Gates, Jeff Bezos you know, Elon Musk, et cetera.
These guys crushing it. And it’s like, you know, they’d. Lose losers, like winners, losers are focused on winners, and winners are focused on winning. Like, that was the premise of it, right? So like, like, think about that. But the world is trying to tear down losers or tear down the winners to build up the losers, right?
Like, think about that, that like, and then everybody wants to be. The world is telling them that they’re just fine exactly the way they are. Think about like, think about that, right? Like you wanna crush it. You wanna build the seven figure, the eight figure business. The ultimate funnel. The ultimate process.
Be the ultimate coach, the best business coach, the best presentation, the best podcast, the best. Whatever. Right? The best husband, the best father you know what I mean? Like the best pastor, whatever it is, you wanna be elite. It. It’s in your d You wouldn’t be here if you didn’t wanna be elite. You would not be listening to this podcast if you didn’t wanna be elite.
But everybody around you is telling you how you know you’re fine the way you are. They’re trying to protect you, right? Trying to coddle you. Here it is. Look, you’re enough, but you’re not good enough. You’re enough. You’re enough. You’re good. Just the way you are. You got everything that is within you now, but you’re not good enough.
Keep pushing yourself. Keep pushing yourself, and that there’s a little bit of magic in that. The way I started my presentation is that I said, okay, so let’s say that we have a, a company and they made a million dollars net last year. Okay? So it was a million dollars of profit. And that may sound like, oh my gosh, that’s so much money.
That might sound like a ridiculously small amount of money for you. Let’s just assume that it’s somewhere in the middle. But we got a company that made a million dollars last year. Put your hand up. This is what I kind of said. Put your hand up. If you would sell your company for 5 million bucks, who would like to sell their company for 5 million bucks?
Put their hand up, as you could imagine. Got a hundred people in the room, a hundred people put up their hand. Or certainly the vast majority, right? So everybody wants to sell their company for 5 million, including me. That sounds like a, that sounds like a great idea, right? Not that I would so my company for 5 million bucks, but you know what I’m saying, right?
Like 5 million, like sign me up, let’s go. So, and by the way, if it had a million dollars of profit, help me with that multiple. What’s, what’s the multiple there? Okay, that’s a five x multiple on their profits from, you know, year X. Okay. So they get a five times multiple, which you understand this world.
That’s pretty darn good, right? So the textbook would tell you sell more or sell, and then you’d sell. Here’s the problem. Let’s assume that you sell it for 5 million. Let’s assume that there’s a million dollars of debt, right? Because believe it’s, it’s not gonna be all, you know what I mean? There’s gonna be a million dollars of debt.
Okay, well, what happens? Five becomes four, right? And then you gotta sell. You gotta pay somebody, right? In order to sell the company, be a business broker, an investment banker, but you, you gotta sell the company that’s gonna cost you something. Let’s just assume that’s $500,000 when it’s all said and done, you know, there’s lawyer fees, et cetera, et cetera, but it’s gonna cost you something to sell this bad boy and close the deal.
Let’s assume that’s 500. Where are we at? We’re now at three. Okay on that three, five, bad news, you gotta pay some tax. What’s the tax gonna be? Again, depend on the variables here, like the country you’re in, the state that you’re in, where you’re at but let’s just assume there’s a million dollars of tax.
What are you left with? 2.5. You didn’t sell your company for 5 million, you sold your company. For 2.5 net, right? What numbers? But 5 million does not matter. The 5 million is out the window. What you keep, it’s not what you, it’s not what you make, it’s what you keep right. Falls into the same family as that.
You’re bringing home 2.5, so. Would this be a way better idea? And I want you to think, I’ve said this on the podcast at different times. It’s certainly something that I, you know, buried my, you know, I’ve said this for years. And I encourage you to submit it to, to memory, right? Old money equals never sell.
Okay? So if you introduce me to a great gr, you introduce me to a family with old money, I will introduce you to a great-grandfather, a great-grandmother who had the guts not to. Okay, and I want you to think of the house downtown. I want you to think of the business like Walmart, like Wild Walmart. I’ve read recently that they lost, I don’t even know what it was, but like 200 billion, some insane number, but like a hundred billion, 200 billion of net worth over the last X amount of time because a stock market took a hit.
Do you think they care? , do you know what they’re worth? Right? And then the question is, why, and I just said it, you know, Sam Walton, if you haven’t read the book, made in America, absolute must read, but old money equals never sell. So let me come back to my example. You, you sell your company for 5 million net out, 2.5.
And by the way, 2.5, let’s assume that’s three. So I’m not, but again, you made three, right? You made 2.5, you made three. You didn’t net out at 5 million, which is what the, the number that got you excited at the beginning and we’ll get them excited. So a better idea, I think you tell me, you ask your business owner with some factors maybe
that
[00:13:49] Karl: I’ll cover in a few minutes here, but like, wouldn’t it be a better idea if you’re making a million dollars of profit?
Why don’t you bring in a superstar, right? To hire a headhunting company, pay them real money to find you somebody who’s gonna absolutely crush it to run your company, pay them 250 grand plus incentives. Okay, let’s just, let’s forget the incentive. They just should have, it should be incentivized, but let’s just say it’s two 50 with the incentives.
So if you were making to help me with some math, How much were you making at the very beginning of the story? The answer’s a million bucks net, right? That was the profit. And then how much did I just say? You’re gonna pay this guy or gal? That’s gonna take over two 50. Okay. 250,000. What are you left with?
750 grand For how long? The answer’s forever. Right? And by the way, and then see what will happen is this guy, this exact example, this guy will sell the company, he’ll go golfing for six months. He, they’ll often die, by the way, which bit morbid, but that’s what happens. But he’ll go golfing and then he know what realizes is there’s only so much golf you can play and he’s bored, bloody stiff.
So then he enters our world and there’s some of you are listening to this right now and live, have lived. And now you go, I want to become a consultant. Right? Which you probably should. If you sold a company for five Schmill, you were making a million dollars net, you know what the heck you’re doing. You should totally be a consultant.
It’ll be a great twilight career for you. Well, what if you did this? What if you paid the guy 250 grand and then became a consultant to your own dang company and continued to get 750 grand profit for how? Forever. And then, by the way, the guy that you hired for 250 grand, what would his job be? His job would be to take a million net and turn it into 1.5 net over a body of work.
Because you see, you’re old and tired at this stage. Not so much old. Like maybe you’re old, maybe you’re not, but you’re tired, you’re over it. You no longer lacking passion. All those, you guys know what I’m saying. Right. You’ve seen it. You’ve, you’ve, it just makes perfect sense. Right. So instead of selling, hopefully you’re getting, like, this is where people miss the boat.
Like they make these dramatic yeah, it just makes mistakes. Like I just don’t, you shouldn’t sell, like if you have a house again, instead of selling it like my, okay, so somebody has a house and let’s just say it’s a $800,000 house. They owe. 200. Okay, so it’s that 600 grand. Why do they sell the house?
Cause they want the 600 grand, maybe they need the 600 grand for what? Maybe it’s college for, you know, part of it’s college for the kids. Maybe it’s you know, it’s whatever. It’s buying another house often. Right. Well do this. Go to the bank. And you have to pay tax while depend upon of it’s primary residence.
And of course where you live, in the country where you live, there’s some factors there. But there’s a chance you gotta pay tax on the 600. A good chance you don’t. But if you do, it’s a horrible idea. What you really should do is go to the bank and you can get access to about 80% of that 600 grand for zero tax.
You know, cuz it’s, it’s, it’s borrowings, right? Like you’re borrowing the money from the bank. You’re not, it’s not income, so you don’t get taxed on it. So let’s say you could even, let’s just say you could get 350% of it. You got $300,000 cash. And guess what? You still own the house. Old money equals never sell.
So you got your goal, you needed, maybe you didn’t need the full 600, let’s assume you needed 300, you got 300, never had to sell your house. So old money’s equals never sell. Always other options. Thinking outside the box, right? Like are dangerous, Dave. Thinking outside the box, right? I was looking to buy a company looking to sell a company.
Yeah. There’s some activities and questions that I’d be looking at, like what are the key things that drive this company? I’d look at the lead generation. How do they bring in leads? Look at the conversions. How do they convert? Who converts? Do they have a sales team? Like I wanna understand conversions.
I’d also wanna know fulfillment. Just three baskets, leads, conversions, fulfillment, real simple. How do they go about fulfilling their services? I wanna know more about that. And what are the activities that lead to them effectively making operating cash, right? Operating income referrals. Do they get referral?
What percentage of their clients are referrals? If they’re not getting referrals, I’m gonna be asking why. If they’re getting great referrals, I’d wanna know more about that and that’s which company are gonna be more, is gonna be sexier to which company is gonna be more attractive. The one with more referrals or the one with no referrals.
Very obvious. Well, I’d wanna know that number. I’d wanna understand their upsells than their cross cells. Right? Do you want me to supersize that upsell? Do you want fries with that? Do you wanna, you know, a. What am I trying to say? A Sunday, a chocolate sundae. Do they say that? Apple pie. Apple pie. That’s, do you want an apple pie with that?
But these are cross sells, right? Do they have those in place? If they don’t, that might be a real easy opportunity for me to put money straight in the bank account. If they’ve already got those things and they’re maximizing ’em, this would bring me to a different determination. I’m asking questions, I’m getting answers, and it’s around activities, right?
What’s the owner’s role in the company? That’s absolutely something that I would be. I wanna know what the owner is doing and I wanna know how important his role is and if it’s way too important, this is a concern. If it’s super unimportant and he could be replaced really quickly, does that make the business more attractive?
The answer when you’re looking to buy the answer would be yes. What else? Like activity, like growth opportunities, you know? Is this. So there’s a saying, I’ve got the second business eats the first. Okay, very. Whenever you meet somebody and they own multiple companies, they’re CEO of multiple companies, like the worst idea ever, 98% of the time, sometimes gimme the anomaly.
But I don’t play with anomalies, I just play with percentages. And that’s a really bad idea in most cases. But where there’s the exception. It’s where the second business speeds the first. Okay. If you want an example of this, just look at Amazon. I talked about this at different times in different ways.
Not quite like this, but you know, Amazon, they, well, look, what does Amazon do? They go to their profit and loss statement, and they go to their expenses. And they look at their biggest expenses and look to start a company there. And I just described Amazon Web Services by the way. And then they start a company there and then they become their own client.
So they know where immediately they got a great customer on day one. Right? So thinking about that second business needs to feed the first, not second business eating the first, and that’s where people fall down. Yeah. Multiple streams of income. I’m not going down that one. You guys have heard me talk about that if you’ve followed any of my stuff, but it’s terrible idea, right?
Again, 90% of the time, yes, some people have pulled it off, but generally speaking, when somebody tells you they have multiple streams of income, that means they have really bad streams of income, right? So there you go. What are my activities? And so I’m looking to buy a company. I’d look, I’d wanna do some due diligence.
I’d look, look at their finance. Do they have financials? They’ll often have a profit and loss, like an income statement, but they won’t have, they won’t be able to provide you a balance sheet and they won’t be able to provide you a cash statement. And buzzer not doing it. Like unless I can see those three documents, this is not happening.
What I actually wanna see is I want you to picture this. Ideally I’d have a diagram for you, but you got on the left hand picture a page from left to right. When we did you know how to read financial statements, this is the way I explained it, but a balance sheet is a picture. Okay. A family. I describe it as a family photo.
Okay. Nothing happens on a, nothing happens in a business day to day that does not land on the balance sheet, nothing. It’s very important document. And then it’s a photo. So you’ll see it says as at January 1st, right? As at March. First, right? So it has as that, and it’s just a picture. Boom. It’s, it’s a, it.
Picture in time. Okay. Whereas an income statement, you’re gonna see it some for a period of, you know, January 1st, December 31st. Right? It’s for a 365 day period. Or it might be a month, it might be a quarter, it might be a full year. Right. But you’ll, it’s a, so think of that as a home movie, okay? Where it’s, it’s basically for a period of time, again, a month, a quarter, or a year, okay?
So it’s more, think of it telling a story. And then there’s the cash flow statement that if you have 10 clients, I’ll introduce you to 10 businesses that don’t have a cash flow statement, I would imagine really good chance. Huge, huge, huge error. And then the cash flow statement once again, is a movie. Okay?
It’s a home movie. So think about that as over a month, a quarter, or a year. So I’d wanna see the balance sheet on the left. I’d wanna see the income statement inside. I would wanna see the cash flow statement right beside that. And then I’d wanna see another balance sheet as at, okay, so again, so it’d be as at January 1st, and then my next balance sheet would be as at December 31st.
So in the year. And, and the two movies in the middle would be for one year, right? 360. Five day period. So think of the balance sheet as two bookends and then the other two documents. The income statement and the cash flow statement is movies to that will explain to you how the balance sheet on the left became the balance sheet on the right.
Cause the, the balance sheet on the left and the balance sheet on the right should look, you know, they’re gonna look different. How different and good and bad will, well, we’ll be told by the two movies in. How did you get there? So anyways I, I would want to see those financial statements. Another thing I would want to see, multiple financial statements, like a mistake that people make is they show you a financial statement.
But without a comparable, okay, so I’d wanna see three. Let’s say I wanna see 2020, 2021 and 2022, and then I’d wanna see projections for 2023, by the way. Right? So that would be four, but I definitely, I wanna see a few because if I stand on a scale and I’m 200 pounds, That might be, I might, if I was two 30 a month ago, I’m doing great.
If I was 180 a month ago, I’m not doing so good. The comparable is critical, like, where did you come from? Right? Am I going in the right direction? So, so that’s important. So financials, I wanna be able to see those. I wanna see comparables. There’s two other words. I’m not gonna, there’s relationships and trends.
I’ve talked about those on, you know, different times. It went pretty deep on that in the training, but just relationship between the numbers, right? So if you did a million dollars of revenue and then your rent was 250 grand the relationship between rent. Of 250,000 and revenues of a million, that’s the relationship.
Is that good? Is that bad? Is that industry standard? These are some questions that I would want to know. Some, you know, around, those are some questions that I’d be asking. Relationships and then trends. So relationships go up and down on a financial document and then trends go left to right, and basically trends are, are we, are the numbers trending?
Are the numbers trending down? Are the numbers trending? Stagnant, right? So if you did a million dollars and then you did 1.1 and then you did 1.2, the numbers are channeling in the right direction, right? If you did a million and then you did 900,000 and then you had 800,000, look, this is a business going backwards and I wanna ask some questions and maybe it’s just because the, the owner is.
Over it. And he just, he’s playing golf four times a week. Okay, well that will explain it, but if I look at maybe something else I would wanna know is the industry, right? Is the industry on the way up? Is the industry on the way down? Let me tell you real quick, if the industry is on the way down, this is a business you don’t touch, right?
Because again, That’s a metaphor there, guys. You’re surfing. I, I’ve done some surfing in my day. I’m not very good at it, but I like surfing Kelly Slater World Champion for 10 years. Me, you know, lightweight surfer. Without a wave. Kelly Slater and I look like that we look like seals on a board in the middle of the ocean.
Okay. You give me a really good wave, you know, a four foot wave, which I can handle, and I, I can look like I know what I’m doing on a surfboard. You give me a wave that’s too big, or a wave that’s too small. More to the point. I’m, I’m, I’m looking like chump, but Kelly Slater will make that look like magic.
The bottom line is that the wave is what dictates whether or not we can surf. Okay? So we, you’ve probably had that client in an industry where they just can’t miss right now think anti-aging, like a, you know, a client doing Botox, which again, you know, you, that’s an industry is, let me ask you a question.
Is the population aging? Are we becoming a, an, you know what I mean? Like, is there more people over the age of 60 than there? Five years ago and 10 years ago, the answer is obvious. Right? Very much an anti an aging population. So therefore that’s like a surf, that’s like a, a wicked wave, right? That you could be the worst business operator in a bad market and still crush it because everybody wants to now go get Botox.
Right? Makes sense. So these are things, but that when I’m comparing the, the trends left to right, my, you know, financial statements, which, where are they going? Very important. Another thing I’m looking for is like concentration risk, where, you know, one product, one service, one staff member, one client, one lead generation process, you know, one area of the business that makes ’em vulnerable.
That’s, that’s a bad thing. Too much again, the owner, we talked about him earlier. If he’s doing too much and too important to the business, this is a really bad thing. So, I dunno, maybe threats to the industry is something else I’d be looking for. There’s another one. This might be a rabbit hole, but like, okay.
No, look, okay. Operating cash. Okay, so. There’s different with cash flow statement, okay? There’s three categories. It’s actually five categories, but it’s three categories that matter on a cash flow statement, and that’s if there’s finance, cash there’s this investment cash, and then there’s operating cash, right?
So if you went to the bank and borrowed $500,000, Is that as attractive of cash is if you own a landscaping company and you made $500,000 doing landscaping, okay. Or, or if somebody came and decided to become a business partner and they bought 25% of your company and gave you a $500,000 check, is that the same?
Okay. And the answer is they’re not even close. There’s only one type of cash. It, there’s one type of cash that is a hundred times more important than the other two types of cash, and that’s operating cash. So when I look at the cash flow statement, what I’m really looking to do is see the health of the business, right?
Because again, let’s say that they’ve got, like the example I gave in Cancun is, let’s imagine that this company’s got like 10 trucks and they’re all a hundred thousand dollars and they sold three of them last. How much is that? That’s 300 grand. Where did it go into the business? Well, if you just looked at the business and didn’t read the financials, it would look like they made $300,000 last year that you’re definitely not gonna duplicate next year.
Or if you do, you’re gonna be running out of trucks real. You’d do that three years in a row and then you’re left with one truck. Right. So you see how, or you sold a piece of real estate for a million bucks, it makes you look like a genius in, you know, 2021, you go to buy this business and don’t realize, but I mean, yeah, look, imagine how how different that makes their financial statements look, right?
So, so that’s why you gotta be able to read financial statements. That’s what we taught a course in recently. But it, this is something that I would wanna see through a company. You know, you, you guys have probably heard terms like roll up and earn. Like a roll up is where a company will go and they will buy, like, you know, you’ve probably heard of a company where they own like a hundred you know, clinics of something.
Like, let’s just say they’re, they’re optometrists, right? And somebody owns 75 and they’re mo moving towards a hundred. That’s a roll up because if you’ve got a business that made say a hundred thousand dollars profit last. And then you get a three multiple, what’s that? That’s a three. That’s a company that’s worth $300,000.
That’s the valuation you’d get. Well, if you take that a hundred thousand dollars profit business and roll it up in a company doing $10 million and it becomes part of that, you immediately get a significantly bigger multiple on your company. Like you make that company significantly more attractive, significantly more valuable the minute you roll it up.
And that’s why those companies do that. I don’t know that that’s really worth talking about much here, but that’s something you might wanna be, you as a business coach, I would encourage you to understand that concept. And then you’ve probably heard of an earn out. Think of earn out as if then, okay, so if this happens, then this happens.
It’s, you heard of the insurance guy that sold his business for a million bucks, right? That was an earn out. So he really didn’t get anything. If the business continued to, to do, you know, status quo. And grow a little bit. And by the way, that guy normally sticks around for, you know, 1, 3, 5 years to see that through.
But he becomes a staff member as opposed to a business owner. Somebody else takes it. So he gets paid a million bucks, but it’s really on an if then basis. So it’s like an so an earn out is when you hear about the insurance guy that sold this company for a million bucks. Generally that’s what it was.
What else am I gonna go over here? You know, one of the slides look, you’re not too late. Okay? Again, a lot of people in a room, a lot of people listening to this might be kind of feeling like, you know, maybe like they’re not going to be that uber, uber success, but they’re more, they wanna make 250 grand a year and they’re happy with that.
They really wanna be, you know, the 10 million, a hundred million dollar operator, but they just don’t feel like, like they kind of miss their opportunity. Let me tell. I wrote this in a, I’ve written this in an email multiple times, but you know, Ray Cro was 52 when he opened up his first McDonald’s. You know, Morgan you know the actor, right?
He was 52 before he got his break. The Red Bull guy, he was 61 when he started Red Bull, Stan Lee of Marble Comics. I don’t know what he was, but he was, he was over 40 years old when he got going. Henry Ford, I don’t know how old he was, but he was over 40. Rodney Dangerfield, same thing. Well, in, I think he was 46 maybe when he got his big break, but he, bottom line, mid forties, you.
But Ray Crop was 52 and Colonel Sanders was 62. Those two I know for sure exact, well, I dunno exact dates, but, but those are well documented and out there, you know, so like, you know, you’re not too late. You’d be very, very surprised. And you’re also not too young. You know, one of our guys, he’s I think he’d be 24 now, does about 400 grand a year.
You know, he’s young guy, you know, just, but, but I’ll tell you, he, he doesn’t operate like a young guy. He’s got the confidence of a 60 year old and, you know, he’s crushing it. So there, there’s also the other side of it. Look, if you were looking to buy a company, I want you to think, like, let’s say, let’s use a hair salon as an example, or it could be a chiropractor or physio or anything like that.
But like, there’s 10, let’s just say there’s, there’s 10. There’s 10, what do you call ’em? Like in a hair? Like there’s 10 chairs in the hair salon, right? And there’s eight that are empty. Okay? So two are active. My question is, do you wanna buy that company? Or there’s another one where there’s 10 beds and there’s nine, or there’s 10 there’s 10 chairs that are nine or full.
Which business do you want to buy? Let me tell you, I wanna buy the one with the eight empty chairs. Why? Because they’re only operating at 20% capacity. The one that’s operating at 80%, 90% capacity, there’s no room to move. So they’re gonna be asking top dollar, getting top dollar. And I don’t have, unless I have a really solid plan you know, the.
The, the lower end operating business would be more attractive, which I think that goes against conventional wisdom. And of course that is a very, that’s a bit of a black and white explanation to something that’s very, very gray, cuz there’s other factors, which, the factors that I went through earlier on the questions that I’d be looking at.
But, but lemme add some mistake that people make is they’re looking for the business that’s crushing it. That’s not necessarily what I’m looking for. That might actually, that’s the personality profile. Like there’s lots of things that would go into that. Just use your imagination. No doubt. You know, there’s asymmetrical risk reward.
You know, if I wrote this in an email not long ago and like a random thoughts kind of thing, but like, if you know it’s gonna work, it’s not an experiment, right? So like, You know, as an example, you know, we, you know, 47 countries got over a thousand people working. You know, with us right now, if I started a digital marketing agency tomorrow, I guarantee it would be successful.
I guarantee to drop the mic. I couldn’t not make it work, but, But, but would it be taking away that there’s gotta be some other questions that go into making me decide it, but what I’m getting at is that like there’s asymmetrical risk reward at Jeff Bezos. I mean, if he’s gonna start a company, remember his second business needs the first, he didn’t have to, he wasn’t wondering if Amazon Web Services was gonna be successful because he was automatically gonna become his biggest client.
And just by virtue of that, he knew that he was gonna be able to do well. He had no idea. I would imagine when he started it, it would go as well as it, you know, it has and it does. You know, that, that alone probably be a trillion dollar business one day. Unbelievable. Like bigger than Amazon, in other words.
But anyway, so that’s asymmetrical risk, reward the richest people in the world. This is the one thing that they all have in common. Okay. Where they’re looking for like a high risk low, or, sorry, sorry. No, very low risk, very high reward. Like, let me, okay. So talking to you as a business coach, Think we may have talked about this recently, but again, we cover a lot here.
Let me just like hiring, okay. I meet a business coach. They’re doing okay. Making their a hundred grand. What’s the goal? I wanna hit two 50. I’m like, okay. It’s not how, it’s who, who’s gonna help you? Well, Let’s say if you hired a lead generator that all they did was generate leads, make call, send out direct messages, knock on doors, go to networking functions.
All they did was generate leads for you. That’s it. Every, every day for 12 months, and then you paid them $2,000 a month, which would be terrible wage, but let’s assume you could hire them for that. That’s 24 grand a year. Well, And by the way, that’s six. You don’t let, it’s six grand in a 90 day test. Okay?
So you’re putting $6,000 in harm’s way. Cause let’s assume that in 90 days you get out of this, right? It’s not going well. You’re putting $6,000 at risk. And if you charge two grand a month, and that’s 24 grand a year, how many clients do they need to get you in a 12 month period to break? And you guessed correctly, one, think asymmetrical risk reward.
Are you willing to gamble six grand on having a lead generator that absolutely crushes it for you? And I always, so here’s what the business coach says to me, Carl, I get it. I agree. That’s awesome. I’ve never thought about it that way. I’ll hire them when I’m ready. And then I say, guess. You’re never gonna be ready.
That’s not the way it works, right? You gotta, the reasons come first. Answers come second. Pretty sure that’s directly out of Tony Robbins’ mouth, right? But that, that’s the way reasons come. First answers come second, right? So hire them and then just watch what happens. But you’re only putting six grand because you let them go on day 90, you paid them six grand.
Wave, goodbye. And then, you know, hopefully you’ll try with somebody else and not give. But that’s what you gotta do. You gotta, if you, and by the way, if you charge one grand a month, that’s 12 grand a year to get two to break. Even if you charge two grand a month, you gotta get one to break even. But if you charge two grand a month, that’s 24 grand a year.
If they get you two clients, you double your money. Right? And then go up from there. Why do people invest in Bitcoin? To double their money, right? Well, I don’t know. And then, by the way, asymmetrical risk reward. What if she gets you? He gets you 30 clients. This. Right. And what if that 30 clients becomes 300 grand?
Guess how much you paid them? 24 grand. And, and there should be incentives if they’re working out that well, no doubt you’d up their pay, but no doubt you can see asymmetrical risk reward. That’s an example. But you gotta, reasons come first, answers come second. You gotta pull the trigger. Example that I have, you know, I, my clients have talked about this tons, I’ve mentioned it here on the podcast different times, but like I, I go to the Chamber of Commerce.
The gal who’s the number one salesperson here is my question. That person is who I’m targeting. I get ’em out to lunch, I get ’em on the phone, I get ’em one to one, and I just say, look, here’s what I do. I pay a thousand dollars cash for every client you get for me. This is how we do it. No, you’re not gonna send me anybody that’s gonna buy straight away.
Everybody’s gonna be sent to my education. So that’s gonna be my webinar. My, you know, my, my, my live event at the chamber where my live event, wherever, at the golf course, at the yacht club, at the chamber, at the wherever, right? The high end hotel. So in, you know, you invite them to there and anybody who buys, I pay you a grand.
And by the way, I would like to pay you a thousand dollars up front for your first referral. Because you said you’re gonna be able to send me multiple people. Well, I just wanna, I wanna pay you grand up front. Done that many a times. And I’ve also been screwed, right? Where I paid the thousand bucks and never got anything in return.
But I have also had that, you know, provide. A 10, 25, 5000 x return in different scenarios, right? With I, I just picked, well, and she sent, he sent a ton of people. So think about who that could be. You know, the guy selling advertising, the, the guy you know, the, the Chamber of Commerce, the person heading up the BNI on behalf of the, the bni.
So, so thinking about that, that’s asymmetrical risk reward. That’s the richest people in the world all do that. What else do I have here? So I’ve got something here, like they, I said this in an email and I remember I said, hopefully I’ll say something more impactful than this, but I don’t know that I’ll ever say anything that’s important and it’s, they stay because they like you.
So I want you to think of your coaching clients. How do you put yourself out there? Would they say that they like you? You know what I mean? Like are you, do you invite your coaching clients to your house? Have they been to your house? If the answer is no, you’re missing out on an opportunity. Have you been to their house?
Right? You’re missing out on an opportunity there to really solidify and really strengthen that relationship. That’s a, again, think of saying this in a black and white way when it’s very gray, but, but, but not really. I’ll tell you that’s, you know, absolutely. Have they met you face to face? For sure.
Have you jumped on, if your clients are all over the country and many are, and that’s a lot of the time a good thing, do you jump in a plane to go see them? And when you do, do you think about the expense or do you think about solidifying the relationship for the next 10 years? Hopefully your asymmetrical risk reward, jumping in that plane will be very smart idea.
You and just then let ’em know you’re jumping on a plane just to take him out to lunch. Cuz you, you, you, you wanna get belly to belly, toes to toes, eyeballs to eyeballs with ’em. You know, extreme. In fact, I got a message from a good buddy of mine played in the NHL lives. Oh my
street
[00:40:44] Karl: in Cologna. And we just talked about Extreme and he was asking me to explain something that I explained.
We used to go for a walk and I was explaining something to him, or, or he wanted me to like, you know, dig in a little bit on, on what that was. And it looked like this. So he’s got this big piece of property and I said one of the businesses that I think could be really good and a, a trend which money is made with trends.
Is having like a what do we call it? Like an RV park or like a camp, like a camping ground, right. Where we live, you know, like it’s a pretty popular place to to do. So, and then, so what I said to him though, I said, so if I own, let’s call it an RV park for the sake of the argument, right? But I want you to think, kids, I don’t, I don’t want a bunch of drunk jerk offs, you know, breaking beer bottles and screaming and staying up till three o’clock at night.
Those, that’s not my market. If you don’t have kids, I would think very strongly about not, you know what I mean? You gotta be, I’m looking for kids, I’m looking for families at the end, right? So it’s a family rv. So what I would do in the family RV park is in the middle. I would build something that would be so gob smacking, so incredible, so crazy that moms would go and take a, would not be able to not take a photo.
Okay, so what would it be logically, kids? What would I put? It would be a slide. It would be like a like think a, a playground. But what I would do is make it all different colors. I’d make it red, I’d make it yellow, I’d make it blue every year. I would repaint it so that when people came, it still had that glossy, brand new feel to it.
And I would have a massive slide. I would’ve something that people again wanted to take a photo of, right? And then why would I do that? I want you to think of the Eiffel Tower. What do people do? They go to the Eiffel Tower. You probably have this photo yourself. You have the camera, and then you stand there and the photo’s coming up at you and you can see the Eiffel Tower behind you, right?
And then you’re there, and then what do you do with it? You take it and put it on Facebook and Instagram and wherever else, right? Free advertising on steroids and all because it’s ridiculously extreme, right? So I wrote an email about this. Pretty sure it was called extreme. Something to that effect.
I’m sure if you Googled my name and extreme well here, if I owned a pizza place, I would have a hundred dollars pizza and it would be massive. And if you ate it without leaving I would give you a second one for free. Right? And then again, and I would take a photo and I would put that on my social media.
And I guarantee that you would, while there’s a good chance you take a photo of yourself eating this massive a hundred dollars pizza and you know, talking about the free one that you. And you, you’d be doing that, right? Like, so I would get free if I owned a bar again, I would have, you know, a $50 cocktail.
And when somebody bought it, bells would go off. It would be super, like, you know, it’d be ding, ding, ding, ding, ding. You know, like, it would be a big deal. It’d be a special glass. Everybody would know you’re, you’re drinking a $50 cocktail, right? And have $300 bottle of wine for sure, right? And limited supply.
So I, I’d have all those things cuz the money that you’d make on the a hundred dollars pizza, the $50 drink you know, except the $300 bottle of wine. You, you make massive, massive margins, but it’s a talking point. And you don’t even need to be the person eating the hundred dollars pizza to be talking about the a hundred dollars pizza.
Right. And, and by the way, it’s gonna go on social media and you get all kinds of free promotion. Like again, along these lines, like if I was in charge of, I like, okay, your local area, how would you. The price of your real estate to go up disproportionately to the rest of the rest of the the city.
Okay, here’s how you do it. You need to have the best public school of all time. You gotta pay. If the, the standard is to pay a teacher 55 grand a year, pay your teachers a hundred grand so that all the best teachers come to your area, make the school cool, make it colorful, have a big playground you know, promote the heck out of it.
And just have it so that people, what will happen is people will be moving to your area so that their kids can go to that. Okay. What does that do to real estate? What does that do to real estate around the school? It goes up dramatically, right? Whereas most people, they’re not thinking like this, right?
And again, I’d have a playground at my school and I just described what it would look like. Or maybe I’d put an ice hockey rink, or I would have the best. A baseball diamond with stands for 500 people. Or I would have a soccer field or a football field, you know what I mean? Like I’d do something wild and crazy where people would take a photo and then basically automatically put it on, you know, put it up on social media.
Think of the, all the massive free publicity you would get as a result. Right. And just Eiffel Tower you know, et cetera. Like, we’re like co colon. That known for red wine again, right downtown. If I’m mayor, I am going, cuz we’re known for red wine, so I’m not gonna do something, I’m not gonna put a picture of a surfer.
But I would do that if I’m in Hawaii, right? Where they’re known for surfing, but we’re known for red wine in Cologna. So I would have the biggest, meanest, most unbelievable glass of red wine downtown that anybody, and again, a lot of people travel there to go to the red, you know, to the wineries. But they’d all take a photo.
And where would they, what would they do with it? They’d put on their social media and absolutely crush it. So your company. What are you, your clients? What are your clients doing? What are you doing in and around that concept? One of the things I talked about is you getting dressed up as a zombie you know, and calling the media and calling the newspaper and they’re like, what are you doing?
Dressed up as a zombie at the Chamber of Commerce. And it’s like, cuz business owners are killing themselves. And I’m basically running a presentation in two weeks that is not just designed to help grow your business, but to make sure that we’re saving, you know, local businesses and local lives because entrepreneurs commit suicide at a significantly higher rate than others, and they die earlier as well due to the stress.
Right, just from natural causes, so, so that might be something you might do, or maybe you get dressed up as, you know, Superman or Superwoman and do something similar, maybe, I don’t know. Do you know what I mean? Like, just, you know, get a little bit crazy, dress up, you’re a guy, dress up in women’s clothing or you’re a gal.
Get dressed up as a tuxedo. Just that would. To be more dramatic, right? Than a woman dressing up as a woman, but, but divorces. And then what you’re doing is you’re saving marriages. You’re there for divorces, right? And that’s why you’re dressed up. You’re a guy dressed up like Dennis Rodman in a, in a wedding out.
Just imagine a promotional. Remember when Dennis Rodman got dressed up as a woman, right? And married himself or something really, really weird. Like I put to a large degree, put Dennis Rodman on the map, right? So you know, do something similar like that, but your saving marriages is where you’re coming from.
Maybe you get dressed up as a little, an eight year old kid. You’re like, these divorces happen, but who really gets punished? The kids of the entrepreneurs, and that’s who I’m here to save. And that’s why I’m running the presentation and that’s why you’re gonna write about me in the local newspaper. That might be your style.
You might have a different idea, but do something a little bit thinking extreme. Again, we a built software. It’s gonna find any business owner a hundred grand and 45 minutes without you spending an extra dollar on marketing or advertising. Believe me, I know that, that there’s similar stuff out there.
Nowadays. So it maybe it, you, you hear it and go, wow, that’s amazing. And maybe you hear it and say, I’ve heard that before. The reason you’ve heard it before is because I’ve been doing that for 10 years.
And
[00:48:03] Karl: believe me, when I did it, other people weren’t saying that. Certainly nobody built software around it, right?
So that little bit on the extreme, on the extreme side. So anyways, there you go. You know what, I oh, my boy rode Doug here. So there’s some, look, I hope that that helps little tidbits. I got, you know what, there’s one other one here, like second order consequences, which I think is good, but like, it’s like the business owner doesn’t realize when he buys a boat.
Okay, so, you know, and let’s assume it’s a hundred thousand dollars boat, which I don’t even know that gets you a decent boat nowadays, but, you know, a hundred thousand, 150, 200,000, you, you spend a lot of money and really stretch yourself. Your client stretches themself to buy the boat. Here’s what they don’t realize.
When they spend that much money on the boat, they now feel obligated to go outside, like to go out on the boat, which by the. Is maybe an amazing idea, but maybe not such an amazing idea if it starts to take time, energy, focus away from their company. Cuz the reason they were able to buy the boat is because they’re dialed into their company.
Right. And I’m not in any way suggesting that people should be totally obsessed with their company and work 24 7 and not have, you know, like fun stuff to, you know, do cool stuff. Like maybe buying a boat is cool to you, right? That’s not the premise of it. The second order consequence, third order consequence people don’t seeing is like buying the boat and then spending a bunch of time in the boat.
And then guess what you do in the boat? You probably drink a few beers and a little bit of wine. Well, now there’s another order consequence the following day. That’s, you know, depended upon your age that can drag on for a few days, right? So, I don’t know. Second people don’t think it’s when they start the second company, right?
The second business eats the first. That’s the second. You know what I mean? Like that’s what tends to. Doesn’t happen today, tomorrow, or next week. It happens over, you know, happens over a period of time, but stand up just a really, really bad idea. Trying to run multiple companies that don’t feed one another.
So yeah, just I could, and again, things that I’ve spoken about in the past a little bit. So there you go. That’s all I got for today, folks. I hope that that was helpful. Shout out to my boy road dog who couldn’t make it today, but Appreciate him more so today than ever, right? With my, you know, road, Doug to go back and forth and poke fun of me and everything that he does.
So anyways, folks, appreciate you guys. God bless you. Look after yourself and yeah, we’ll see you. Next week, Karl Brian built profit acceleration software 2.0 to train business coaches how to find any small business owner more than $100,000 in 45 minutes without them spending an extra dollar on marketing or advertising.
This becomes a business coach’s superpower. So as a business coach, you’ll never again have to worry about working with business owners that can’t afford your high end coaching fees. Check us out at focused.com.