Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "Is There a Simple Business Valuation Calculator".

Listen to the podcast, watch the video https://freedomfactory.libsyn.com/is-there-a-simple-business-valuation-calculator or read the transcript below.

Hey, it's Robert from Freedom Factory. I want to talk to you about a little pain point that we have in our business, and it's a business valuation calculator. People look at real estate and tools like Zillow, or they look at Kelly blue book on cars and they say, why don't you have a business valuation calculator?

You've been doing this for so long, and the reality is we'd love to. Problem is it's hard. And so there are a couple of really good baselines, like revenue and earnings and we can talk about guidelines and what that looks like but what makes us so hard to do is you can take two businesses, same revenue, same earnings, worth vastly different multiples. Literally two, three X each other, not even close. And that's because of the intangibles.

There's so many things to a business -  intellectual property, defensibility software that really make it a more complex discussion than just, Hey, what are your earnings and you're worth five times that hypothetically. Now we're working with it. It's probably a little early to talk about it, but we're working with an amazing company to solve this problem and we're going to have a solution soon. But in the interim, if you have any questions about how do you maximize the value of your business or what your business is worth, why don't you give us a call at Freedom Factory. We look forward to speaking with you soon.

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Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "How Can I Live My Best Life by Selling My Business".

Listen to the podcast, watch the video https://freedomfactory.libsyn.com/how-can-i-live-my-best-life-by-selling-my-business or read the transcript below.

Whenever I go to a cocktail party or a dinner party and I meet a fellow entrepreneur, I usually get the same question, which is how much to sell your business for. There's lots of videos and lots of tools and many things that I've done in the past that will talk to you about valuation or multiple or earnings or all the math that goes into selling your business but what I want to talk to you about today is a bit more of the art.  What I mean by that is really as an entrepreneur, what does it take for you to live your best life? So I remember early on in Facebook's days, Mark Zuckerberg had a chance to sell Facebook to a private equity firm. I believe it was John Dora Kleiner Perkins for $50 million.

And John Doerr told Mark Zuckerberg that with 50 million, you can do anything you want. Mark Zuckerberg had a very thoughtful response, and it was only in his twenties he said, I would do that, John, but I don't have a better idea than this. And I remember when I first heard that story, I thought about how mature he was because he knew that he was on a big idea.

And so when you think about selling your business, what I want you to think about is what is a bridge to the other side? Do you have a large family or a small family? What does it take to create work for you where you're not necessarily worried about finances from here on out? Do you have seven kids going to private school or do you have no kids and live a pretty simple life?

So, how I frame that is you want to make sure you're building a bridge to the other side, not just appear into the middle of the Lake. Because if you sell your business and immediately you have to start a business to meet your financial needs. What did you really accomplish? It makes more sense to put your wood behind the arrow that's really penetrating, or what I mean by that is to really put the effort into the business.

It's already got traction to make sure you build a bridge to the other side. Now, when we talk about it, we can look at comparable sales and we can look at multiples and we can look at earnings. We can come up with a good idea for it. But the one other factor that I would think about on it is, how long do you want to close?

Are you looking to sell close sometime in the next two years? Where you're looking to close before the end of this calendar year. Because if you are, your price and your strategy is going to be a little bit different, right? If you've got a two-year timeline, you can come out very high and start lowering it down to find the market spot.

On the other hand, if you want to close before the end of the year, maybe we start out more aggressively, get more buyers interested and create a bidding war. So there's lots of different strategies. When people say, how much to sell my business for. I'm Robert Hirsch from Freedom Factory, all we do is help entrepreneurs buy and sell their businesses.

Now, if you have questions either on the art side or the science side of how to sell your business, why don't you give us a call for a free appraisal? We look forward to talking to you soon, and thanks for spending your time with us.

Thank you so much. Please hit like and subscribe and we'll see you soon.

Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "When Should I Tell Employees if I am Thinking About Selling".

Listen to the podcast, watch the video https://freedomfactory.libsyn.com/when-should-i-tell-employees-if-i-am-thinking-about-selling or read the transcript below.

Hi, Robert Hirsch from Freedom Factory again. I just had a really interesting email from one of my clients, and long story short, rumors got out among their employees that they were selling the company and he chose not to share that with his team and now it's created some problems for him.

And so I wanted to talk to you today about whether you should tell your employees that you're thinking of selling your company or not. To me, when I sell one of my companies or my advice on it, it's always honesty and transparency is the best policy. That's easy to say and hard to do and you understand the culture at your company and whether you want to have an all hands meeting, whether you want to have an email, whether you want to discuss it. I love talking to our employees about it in a place that's face to face where it gives them the opportunity to talk to me and it gives me the opportunity to comfort them. Depending on the structure of your company, I usually have bonuses or incentives when the company sells, and as an entrepreneur, there's this really important lesson that I learned along the way.

It's, there's no fun winning when there's nobody to high five, and if you're the only one that wins in the sale of your company and all your employees and the teammates and the people that have given the years of their life are worried or concerned about what they're going to do next often you can create a structure that makes it, that everybody wins and everybody celebrates together and, and perhaps, some of your core team is going to want to come with you. Perhaps they transition with the company. Most of the time when a company is acquired, they're going to want to keep the team in place for the continuity.

So ultimately, how you choose to address this question is up to you and it's up to your corporate culture. But often I'll tell a few key members early and the people that are going to help me in the transition, but rumors are unavoidable, and if you don't talk to your team about it, and then the rumors are going to start coming and then it's going to come back to bite you like it just bit my client in the behind and I like to get out in front of it early. I think honest and transparency and creating a game worth winning for everybody is a whole heck of a lot of fun. In that way when you win, you in with everybody. If you have any questions about how to disclose it or what that looks like, just give us a call at Freedom Factory.

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Today's episode of the podcast, Robert Hirsch from Freedom Factory, discusses "Big Mistakes Sellers Make Before Selling Your Business."

Listen to the podcast, watch the video https://freedomfactory.libsyn.com/big-mistakes-sellers-make-before-selling-your-business or read the transcript below.

Hey guys! Robert from Freedom Factory here, and I want to talk about something that comes up a lot when we start working with new sellers, and usually it sounds something like this, should I start a new revenue stream? Should I add a new channel? Should I build an affiliate program before I sell? And while this sounds like a good idea on the surface, in reality, not so much. And the reason for that is twofold. One, when you start a new revenue stream, it's going to burn as inefficiently as possible. And what I mean by that is your customer acquisition cost is going to be the highest and you're not going to add significantly to your bottom line.

Now, most of the time when you sell your business, it's a multiple of earnings. So you want to optimize for earnings. And so let's say for example you could build a new revenue stream, but you're not actually adding a lot of profits. Conversely, you could spend that same time taking your existing revenue stream and for example, let's say you can find an extra $200,000 in profitability through cost cutting on that.

Now that $200,000 in earnings, not only did you make that the first time, but if you sell for five times earnings, that's going to be another million dollars in revenue, or another million dollars in valuation to your business. And ultimately it's these little tips and tricks that make the difference whether you stick the landing or not, you're a business you've worked for years on, and it's the most important asset that you have.

And frankly, sticking the landing is just as important as building and creating a great company. If you have questions about this or anything else, why don't you give us a call it Freedom Factory. We look forward to speaking with you soon.

Thank you so much for watching. Please like and subscribe and we'll see you soon.

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Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "The Art and Science of Selling Your Business".

Listen to the podcast, watch the video https://freedomfactory.libsyn.com/the-art-and-science-of-selling-your-business or read the transcript below.

Probably the most frequently asked question that I get is how do you determine the selling price of your business? And the reality is its part art and part science. I'll go over some of the science, then I'll go over a little bit of the art, and again, experience goes a long way.

Coming back to the science part of it, some of the really simple pieces are what's your profits? Incomes is often revealed in EBITDA or your earnings before earnings tax devaluation and amortization. We convert that into seller's discretionary cash flow for all of our customers. And again, when you're paying your taxes, EBITDA is a game of reduction. The discretionary capital is a video game of maximization or accurately reflecting all the cash flow that your company produces.

You're also going to have things like industry multiples, and sometimes there's little nuance things like if your e-commerce organisation versus a satisfied by Amazon company, you're going to get an actually various numerous. So we wish to ensure to position it properly. A few of the other things, market codes, we had a client and the name of their service was excavation.

Ends up that excavation companies are valued at two to two and a half plus assets. When I say 2 to two and a half, that's a multiple of incomes. Will construction companies of that size have to do with 4 and a half to five. And it ended up that although they began as an excavation company, over 80% of their incomes came as a construction company.

So we rearranged it and that assisted the market code. But whatever we finish with all these numbers, we ensure to take a look at market equivalent and what's the marketplace appearing like? What are the best sales that we can hang our hat on? How does a bank value it? Is it going to be an SBA type organisation? And now suddenly we're starting to get into the art.

My name's Robert Hirsch, and I'm the founder here at Freedom Factory. All we do is help business owners offer companies. That's 100% of our life. When I awaken in the morning, I'm taking a look at market comps, I'm looking at sales, I'm looking at, all right, how do we take full advantage of the sales price of our company and truly work as a partner?

So. Whether you're a physical company that's been around for 20 years or a digital company that's been around for two, we're going to look at all the science and combine it with the art to help you maximize your sales price. Give us a, call it Freedom Factory today. I look forward to speaking with you soon. Please like and subscribe and we'll see you soon.

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Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "How to Buy a Business When You Don't Have the Cash".

listen to the podcast, watch the video http://freedomfactory.libsyn.com/how-to-buy-a-business-when-you-dont-have-the-cash or read the transcript below.

Hi, Robert from Freedom Factory here. And I want to talk to you about a question that we get from buyers of a lot, which is, well, what if I don't have $1 million check to write? And the reality is most of us don't have $1 million check to write, but how do you buy a business if you don't have $1 million check? And that's what we're going to jump into today.

So it's my personal belief that small businesses are the most undervalued asset class on the entire planet. If you're buying a stock and you're buying it at a 30 times multiple or 30 times price to earnings ratio, which is the value of the company.

When you're looking at a small business, you're looking at three to five times multiple, which obviously is significantly different than the stock market. If you have a special set of skills, which is how do you run a small business, there couldn't be a more undervalued asset class, and I think the opportunities are limitless.

And I think one of the big reasons that many people don't consider buying it is they say, well, I don't have $1 million check to write. And that's true for most of us. And so let me talk to you about some options. There there are many more, but I'm just going to go into some early ones. Most businesses sell with some sort of seller financing, especially if the seller believes in their business.

So sometimes you'll have a 30% note, 50% note, sometimes an 80% note to the seller. And what that means is the seller is carrying a note of the financing or carrying part of the financing on the business, and it's secured by the business. So if you didn't make the payments on that note, the seller would come back and take their asset, and that's okay with them.

And usually, we can get a go or no-go in 24 to 48 hours. And if a business is a good SBA business or small business administration, which essentially is a government-subsidized loan, then it can give you up to 80% of the value. So you can buy $1 million company with a check of only a few hundred thousand dollars. That's a great way to go as well.

I've even taken over a business where I have not spent any money out of pocket and people say, well, why would you do that?  It was a tea business and as some of you know, I used to work in the search engine industry and had an early search engine in Silicon Valley and I was considered a search engine expert 10 years ago in my career. Well, there was a tea company that acquired all their customers through search engine optimization. And so they wanted to work with me, but I wasn't willing to write them a check. So I took over the business. I didn't even make a payment for the first six months to make sure it would work, and I eventually bought it and I didn't even write a check for a penny out of pocket. All I did was fund the operating capital needs of the company. So there are lots of ways that you can buy a business without writing $1 million check.

Thank you so much for watching. Please like and subscribe.

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Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "What Are the Types of Business Buyers".

Listen to the podcast, watch the video http://freedomfactory.libsyn.com/what-are-the-types-of-business-buyers or read the transcript below.

Hi, Robert Hirsch from Freedom Factory. And I just had this truly interesting concern, and it was from a purchaser of a business. And in among my other videos I was talking about various type of buyers, right? There's first-time buyers, entrepreneurial buyers, strategic buyers, and we'll enter into an entire host of them. However, however he said, well, what sort of purchaser am I? I'm uncertain. And I made the joke, I said, well, that indicates you're a first-time purchaser. He was actually a serial entrepreneur and we got a great kick out of it. However I wanted to discuss the different kinds of buyers for businesses. And this is necessary not just to purchasers, however to sellers since we're going to have various campaigns for different styles of purchasers.

So let's discuss the first one. And this is what I affectionately refer to as the first time purchaser. These are individuals that traditionally leaving the corporate world. They've got a fantastic education and they're saying, should I buy a business or should I purchase a franchise? And often franchises look excellent to people originating from the business world because they have systems and procedures and they sell franchises often sell on worry. They state, well, you can't get a big account if you're not part of a nationwide business with a nationwide marketing project, you're going to get an actually huge upper hand.

In my experience, that hasn't held true. We have actually offered a lot of franchisees in the past. But the reality is when somebody makes a decision for you, they're not deciding based upon the sign behind you or the name they want you. And so if you're a sign maker and they go to a national indication franchise, they're not going to state, well, that sign franchise is terrific signs.

They'll go with them. They say, you understand, Robert, I really trust you and I think you can make a kick-butt sign for me. Let's do this. And so I typically recommend to my business kind of individuals making the huge transition and the big jump to look at organisations that have actually been around for a long history, that have a great track record and excellent sales and actually good systems and processes. So that makes a transition as simple as possible. But that's actually the first time purchaser. And so companies like that service businesses are terrific, item organisations are excellent, but eventually you want something where your skillset is truly going to add to business.

The second kind of buyer is serial entrepreneurs like me and I've been doing this for 29 years. I have actually been in every company I can consider, and some have actually worked out and some have not, however in general more have done well than haven't. And I normally shift every 2 to five years. A great deal of entrepreneurs, you do your best and let's state you're going to 100% a year or 150% a year, and all of an unexpected you dropped a 10 or 15% and it turns more operational. For me, when it gets operational, there are individuals much better matched to it than me, so I'm happy to offer it to them and get in something where I can be more tactical.

Thank you so much for spending your valuable time with us and we'll see you soon. Please like and subscribe.

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Today's episode of the podcast, Robert Hirsch from Freedom Factory discusses "Strategy to Sell My Business if I am in Vistage".

Listen to the podcast, watch the video http://freedomfactory.libsyn.com/strategy-to-sell-my-business-if-i-am-in-vistage or read the transcript below.

Hey, I am Robert from Freedom Factory here, and if you're a member of Vistage and you want to sell your company, I 'd like to talk to you about that. So you certainly realize that executive coaching and peer discovering groups can be a huge advantage in your growth. There are actually 2 things that have actually assisted underpin my entrepreneurial success.

One is having a peer discovering group, and second is having a mentor and truly learning how to groom that mentor-mentee relationship. And if you think back to school or university, those were the two things that you got, right? You had a peer finding out group or your classmates and you had a teacher.

That kind of structure can really allow you to grow and it's huge. Knowing how to groom that mentor and mentee relationship. When it comes to offering a business or purchasing a business, usually here will, I know someone, but just because you know somebody doesn't suggest that it's the ideal person, or more notably, how are they going to maximize the value of your biggest possessions?

Here at Freedom Factory, all we do is assist our fellow business owners buy and sell their companies. If you're looking to sell your organization or you're seeking to buy, or you have questions of how do I do the analysis or what is my organization worth, or what does the marketplace look like, or what is market timing or anything, why do not you, give us a call here at Freedom Factory?

We're all entrepreneurs and we just deal with business owners to optimize the worth of your most significant assets. I'm Robert Harish, and we anticipate talking to you soon.

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Robert Hirsch from Freedom Factory discusses "How Does Recasting My Financials Affect the Value of My Business". Listen to the podcast, watch the video http://freedomfactory.libsyn.com/how-does-recasting-my-financials-affect-the-value-of-my-business or read the transcript below.

Hey, Robert Hirsch from Freedom Factory here. Sometimes we get so lost in our own nomenclature and vernacular and what we say in our industry, terminology that we forget that everybody doesn't know it. And a concern that keeps turning up is, what is seller's discretionary cash flow? And when you go to sell your business here at Freedom Factory, one of the many things that we do is we modify your financials from taxes where you're playing a video game of reduction to sellers to discretionary cashflow, where you're playing a video game of maximization.

And some individuals say, well, isn't that two sets of books? Isn't that prohibited? That's not it at all. What we do is we take your income tax return and we include every permitted tax deduction that a new seller may not have to do. Possibly they do not have to take their board meetings in Europe and possibly they do not need to spend for their Ferrari and their vehicles and you know, etc.

There's also a lot of non-cash expenditures like devaluation and amortization. That's value that your business develops, and we wish to make certain before we use the numerous that we apply the multiple to the seller's discretionary cash flow as opposed to the EBIDTA. In some companies, this can make a difference. of 20, 30 often even 50% and if you can get 50% more for your company, why wouldn't you do it?

At Freedom Factory, we specialize in helping sellers get the most significant check of their life. If you require any aid with any of this, please give us a call. Thank you so much for seeing. Please hit like and subscribe and we'll see you soon.

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Learn more about the managing partners, Tyler Tysdal, and Robert Hirsch.

Robert Hirsch from Freedom Factory discusses "Strategy to Sell My Business if I am in Tiger 21". Listen to the podcast, watch the video http://freedomfactory.libsyn.com/strategy-to-sell-my-business-if-i-am-in-tiger-21 or read the transcript below.

Hey, I am Robert from Freedom Factory, and if you have actually thought about offering or buying a business and you're a member of tiger 21 we 'd enjoy to assist. As a number of you understand, I was the founder of Austin Group One. We constructed a very lively chapter and we assisted a lot of our fellow tiger members buy and sell companies.

In my viewpoint, the most underestimated property class in the world are little to mid midsize organisations. When I would remain in a group and we would have presentations been available in monthly, it was a different guy in a fit, giving us a two 20 type structure, indicating 2% management fee, 20% bring.

And it didn't matter if it was. Oil or water or any kind of company. It was always the very same structure, but the offers never ever looked various. Now when you look at a little to mid-sized company or a mid-market service, the offers look extremely different and whether you're wanting to purchase a company on capital or you're aiming to make a strategic acquisition, we would like to help you.

As a board member or a company owner, Tiger members are always treated with extra special love here at Freedom Factory. If you require help in strategic analysis, if you need help in referring your operating heads to driving towards the liquidity event, we 'd enjoy to help. So if you have questions on what the market appears like, market conditions, purchasing or offering, simply give us a call here at Freedom Factory and you can call me straight. I'm Robert Hirsch and I look forward to consulting with as soon.

Thank you so much for watching. Please like and subscribe.

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