The following is a transcript of Episode 6 of Return on Podcast, the show where we help e-commerce sellers improve their ROI in business and in life. For more episodes, subscribe to our YouTube channel or listen on Podbean, Apple Podcasts, and Spotify.
All right. Welcome to Return on Podcast, where we talk about the experiences, obsessions, and habits of the most successful e-commerce entrepreneurs. I’m your host, Tyler Jefcoat, and I wanna welcome to this episode of ROP. You’ve heard of return on investment. Well, this is Return on Podcast where we’re going to guarantee that if you invest a few minutes with us this week that you’re gonna take something away, a nugget, a habit, a hack, that will give you a return on the time that you’ve invested with us. In today’s episode of ROP, we’re gonna talk about exit strategy and being on purpose with planning your exit. My guest today is a good friend of mine, Joe Valley. Joe, you’re one of the partners at Quiet Light brokerage, and you are the author of one of the few books that I actually have in paper right behind my desk, The EXITpreneur’s Playbook. How you doing today, Joe?
Joe Valley (00:59):
I’m good. Where are all the dog ears and the flaps and all that good stuff?
TJ (01:03):
Yeah, I left all the like colorful sticky notes out, Joe, but there actually are some underlines in here, so . So Joe, listen, man, you and I have had a relationship here for four and a half years or so. I really respect you, admire you, the way you run your business. You know, for those of you guys looking for a partner as look to exit, QuietLight.com is a great resource. If you have not read the EXITpreneur’s Playbook, you definitely wanna pick up a copy of it. I feel like it’s a pretty good, Joe, pretty good play-by-play on how to get ready to sell, and kind of in the spirit of that, let me just dive right in here. In your book, in the EXITpreneur’s Playbook, by the great Joe Valley here, we have him here. Here’s what you say, Joe, and I wanna get you to kind of give us a take on this. “If you haven’t planned for an exit that hands off a great business to a great buyer for a great price, an inevitable end is going to find you anyway, and it’ll catch you off guard when it does.” Joe, this is the kind of quote that feels like it comes from a place of experience. Like, were you ever caught off guard when you sold a business that you just kind of got caught flatfooted?
JV (02:12):
Fortunately, no. Well, okay. Maybe, maybe on one of ’em a little bit called Cord Hog. I had two partners that didn’t work out very well, and we had to just basically sell it for the cost of inventory. But more often than not, I’ve just seen it hundreds of times from people that woke up and decided to sell their business because they were just emotionally burnt, totally worn out, toast, you know, too much inventory, too much risk and over-leveraged and, you know, needed to get out for one reason or another. They didn’t train for it. They just woke up and decided to sell. And that simply means they don’t get maximum value for it, which is a shame because it’s probably the most valuable asset. You know, we work our asses off as entrepreneurs, right? You know, to do everything we can to build, you know, a financial future for ourselves, to be there for our families, to not have a boss. But when you don’t pay attention to the value of your most valuable asset and how to properly train for that exit, you inevitably lose in the end.
TJ (03:14):
Yeah. And I would say honestly, just to tell myself a little bit here, my first business that I sold, I kind of did get caught off guard, Joe, to be honest with you. I had a similar situation where things didn’t work out between me and my business partner. And I just will be completely honest with you. I had some conflict that I was too much of a coward to bring up with that partner like 18 months before it really was an issue. Right? I knew it was an issue. I didn’t feel good about it. And I was kind of deluded into thinking that we were just growing so quickly. “Hey, we’ve built a company with a hundred employees in four years. Like we’re gonna make more money than we can believe.” And I just thought we were gonna scale ourselves outta trouble, and we actually scaled ourselves deeper into trouble. I mean, do you ever see stories like that where someone’s avoiding doing the things they need to do to get their business ready until it’s kind of too late?
JV (04:00):
Every day .
TJ (04:01):
Oh, no!
JV (04:02):
Every day, unfortunately. You know, and the reason is because, you know, we’re quote unquote “brokers” or M and A advisors or investment bankers, whatever you wanna call us. We’re like very casually dressed investment bankers, right? We do it all online. Entrepreneurs are afraid to have conversations with those people because too many of them are just trying to talk them into signing an engagement letter and earn a commission off of them. Whereas, you know, my first conversation with my business partner, now business partner, Mark Daoust, back in 2010, when I sold my own business, it was a very educational conversation, and it led to deeper analysis of my P&Ls and a deeper analysis of the pillars of my businesses, the strengths and weaknesses, and him saying, “You know what, Joe? Go away. You are in a position where if you wait six to nine months, you’re gonna make a heck of a lot more money. Just wait, it’s in your best interest to wait.”
JV (04:57):
Whereas the other two brokerage firms that I talked to were like, “Here’s the engagement letter, sign this. I wanna, you know, earn a commission off you.” And I was like, it was icky and gross. And unfortunately there’s too many people like that, and it prevents the entrepreneur from having the conversation that they must have, in my view. And that’s partially why I wrote the book because there are more people that don’t wanna talk to me than do, and maybe they’ll feel more comfortable just picking up a book and learning something that way.
TJ (05:25):
Well, it’s like, you mentioned one of the things that I think is really important in terms of the value added by the right advisor, the right broker, investment banker, you know, again, whatever you wanna call it, which is just to be, you know, to kind of put themselves on your side of the table and give you good counsel about when you should exit. Like, what are some of the other, I don’t wanna use the word pillars, ’cause that’s what you use in the playbook to talk about a business, but what are the other kind of keys to the value that you should be looking for in your broker partner or in your intermediary partner?
JV (05:52):
Trust. Relationship, trust, honesty, sincerity, looking out for your best interest instead of their best interest. You know, ultimately at the end of the day. And I talk about this in the book a little bit about, you know, doing the right thing and building a great business with a great buyer, right? At the end of the day, it serves you, right? You’re serving that other person, that potential buyer someday, you’re serving your customers by building a great business, and then that great buyer. And what does it do for you at the end of the day? It actually earns you more money as well, right? And you have a better deal structure. There’s less issue after closing. You don’t have to stick around as long. It’s benefited everyone. And so we applied the same model to our business. We consider ourselves an education company that happens to do M and A deals, right?
JV (06:41):
We don’t make money off the educational parts. We make money off the other part, the M and A deals. So the more people we can have conversations with and the more people we help, the better it’s gonna be for our business in the long run. You know, let’s just say, a competitor may say, “Yeah, let’s sign that engagement letter, Joe. I wanna get my hooks into you for a commission.” Whereas Mark gave me some good advice to help me and told me basically go away. So I was committed to him, right? ‘Cause he was helping me first. It helped him more because by the time I sold my business, it was worth a lot more, and he made more money, and I was better organized, and the transaction was better. In my case, it was an all cash deal. It was great for everybody involved.
JV (07:27):
If I had gone with the other crew, I would’ve sold it for less. They would’ve made less. I would’ve had to work more after closing. I would’ve had to probably do some sort of, you know, seller note or earn out or some sort of deal structure ’cause business really wasn’t ready to be sold. So it’s, you know, if I could just like grab everybody by the shoulders and shake them around and say, “What the hell are you doing? Why aren’t you learning this? Why aren’t you having these conversations?” Your business is your retirement plan. Pay attention to it. Have these conversations, learn what it’s worth today, reverse-engineer a path to your goal, and learn what it is today. Learn the value of it.
TJ (08:03):
So one of the things you do really well in the book, Joe, is you do a great job of weaving in stories. I think some of them are like, you like change the name to protect the guilty or the innocent, right? That kind of thing.
JV (08:11):
Oh yeah. Yeah.
TJ (08:12):
So like, is there a story, again, without violating anyone’s confidentiality, is there a story that you could share that would really bring home the point that you don’t wanna be caught off guard as you’re kind of preparing for your business that you could share with the audience? One that kinda comes to mind? You got like 50 in the book, but I’m putting you on the spot here.
JV (08:29):
I know, the original concept of the book, there was gonna be a chapter on, you know, training and planning, and then there was gonna be a chapter on somebody’s incredible exit story type of thing. But the book’s already 300 pages long, so if I had done that, it would’ve been twice as long. Maybe that’s my next book though, Incredible Exits. I already own the URL, folks. Don’t even try to get it. It’s mine.
TJ (08:48):
.
JV (08:48):
And I say that – you’re gonna have to stop me from going on tangents ’cause that’s what Joe Valley does. But I say that because I was so proud of myself when I was writing the book and I bought the URL, EXITpreneur.com. I’m like cool, locked in. Good to go. I can’t spell, apparently, because I spelled “EXITpreneur” wrong. It’s “e-u-r,” not “uer,” and somebody else already owns EXITpreneur.com. And it’s funny ’cause he – I initially had somebody reach out to him to buy it, and he wanted $10,000. In hindsight, I should have bought it because now he wants a quarter of a million dollars.
TJ (09:23):
Oh, okay.
JV (09:24):
Not gonna happen. All right. So what the heck did you just ask me? Yes.
TJ (09:28):
Any stories, any current war stories or recent war stories that have been like, you know, either the cautionary tale or man, this is what’s really been great for a – ’cause, I mean, here’s the thing: you and I have the same way, by the way, we can tangent, we can give nuggets and drops, but like, stories are what make your book so like digestible, right? Because you can feel Jake’s situation or Tyler’s situation. I just didn’t know if any of those, like were just hot on your mind here recently of what was either a wake up call for an entrepreneur or a, “Oh damn, I’m really glad I did this.” Like that kind of thing.
JV (09:58):
Yeah. So I just, I was actually having to write a case study yesterday for a promotion that I’m doing, and let’s just go with a guy named Billy, right? So a guy named Billy that came to me for a valuation. Funny part of the story is that every time I talked to Billy, he didn’t have a shirt on. He lived in Costa Rica. He’s from New Jersey, moved to Costa Rica, big into jujitsu, and apparently every time I talked to him, it was just after a workout ’cause he never had a shirt on. Kinda weird. I got used to it after a while, but was kinda weird. But he had a –
TJ (10:31):
Did you get too used to it though, Joe? Did you get too used to it? I mean, come on.
JV (10:34):
No, no, no, not at all. Lot of tattoos, too. So he had a single SKU business. It was in the pet niche, recurring revenue, which is great. But it was one SKU, and all of the revenue was driven by Facebook ads or primarily one Facebook ad. So it was a one product, one ad, four hours a week. It was the classic four hour work week. And I’m like, “Billy, this is a lot of risk.” I was like, “You are on a knife’s edge here. If anything goes wrong with that ad, anything goes wrong with that SKU, or competition comes in, it’s gonna be very risky for the buyer take on.” And he’s like, “Oh hell no, that’s just the opposite. That’s what makes the business beautiful. It’s so easy to operate. It’s a single SKU. It’s not complicated at all. I can really work it, and live my life the way I want to.”
JV (11:25):
He was doing very well financially. You know, the business was probably worth, in my view, a couple of million dollars, right? But if he had multiple SKUs and more than one channel of revenue and more than one advertisement, it could have been worth three or four million dollars. Well, Billy didn’t believe my opinion or value my opinion. We got along well, and I’d seen him since. So he decided to go a different route, let’s say. He had it listed for six months. Absolutely no interest, didn’t get it sold. Instead of the $2 million, he listed it for four. And then I saw him at Traffic and Conversion six months after his engagement ended. Well that single Facebook ad got disallowed by Facebook for some reason, and that drove all of his revenue, and then he couldn’t recreate that watered-down ad that he needed to.
JV (12:24):
And essentially his business went from, in my view, $2 million to maybe, at best, worth $7-800,000. Because he took the easy, lazy route and the four hour work week route, which, you know, has its pluses, but there’s so many more minuses to it than pluses. He wasn’t building, as you said, that initial quote, a great business, a low risk business for a great buyer to take over at a great price. He was thinking solely about himself and the lifestyle that he wanted to live and run the easiest, simplest business possible. And with that comes a great deal of risk and he lost it all.
TJ (12:58):
I wanna talk about that, like this idea of what a great business looks like. I wanna get your kind of thoughts on this, because the tsunami of aggregators that entered the space over the last 24 months in some ways kind of like irrationally changed the definition of a great business by making – if you think about, if your job is to deploy $50 million as quickly as possible, you don’t have a great operations team set up, then you’re kind of incentivized to get as simple a business as possible. Maybe not one SKU and one Facebook ad, that’s super simple, but you want a really simple business with really low variability. Right? And yet like four years ago, Joe, if you and I been talking about it, almost every seller that was maybe one, two, $3 million a year in revenue, we would’ve said no, no, no, no, go ahead, and like, if you’ve got more than 12 months, go ahead and try to get a second channel or extend your product line. Like, what are you seeing kind of right now in kind of this weird, almost bearish 2022? Like what are the profile of that quote unquote “great” e-commerce brand kind of moving toward in your opinion?
JV (13:55):
That’s a great question. And we could go off on so many tangents with the FBA aggregators, for sure. It’s interesting. Different folks are having different visions and views of Q1, 2022. I’ll just tell you real quickly, Quiet Light’s off slightly, but our new launches is up 41%, so – and we’re off slightly because January is just funky for some reason, but it’s always timing with us. We get a slew of things happening that close, and then there’s a quiet period. So based upon the new launches that we got, I think we’re still gonna be up substantially year over year. Our goal is at least 25%. We’ve grown 55% a year on average, 85% last year, Tyler. So even though there’s a bearish outlook to 2022, I think we’re still gonna be up and strong.
JV (14:46):
I think the aggregators did what exactly you’re talking about. They tried to find the simplest businesses possible, ’cause they really didn’t have the operational teams to run them properly. And many still don’t, even the biggest and best don’t. They have grown so quickly, they brought on so many staff that really are not well trained or well versed at running an Amazon business or managing inventory, or projections and things of that nature that they’re running out of inventory. Which leads me to say anybody watching this at any point now or in the future, if you sell directly to a an aggregator, make sure that you have View Only access to – if you’re going to, by the way, nine outta 10 deals are not all cash, you’re going to get a seller note or an earn out or stability payment with them, even though that’s not what they promote.
JV (15:36):
So you wanna have View Only access to your seller account. And then you want to have some sort of clause in there that says that if you run out of inventory on xyz SKU for any more than two weeks during a three-month period, all bets are off. You owe me the full, earn out stability ,payment, whatever it might be in full within 30 days, I’ve seen it happen twice. And one deal wasn’t our and somebody lost an awful lot of dough. The other deal was mine specifically, and we had a clause in there. My client would’ve lost $300,000 if they didn’t have a clause in there. And they kept pestering the aggregator saying, look, man, you’re gonna run out of inventory. And within three weeks of hitting that that annual benchmark, they ran out of inventory, and they were like 94% of the goal, and they ran out of inventory. A little suspect if you, you know, to save $300,000 –
TJ (16:30):
And I think that’s actually, like from my CFO clients, ’cause we had a pretty sizeable large, you know, group of guys and they took all different routes. Some of ’em came to you guys. Some of ’em tried to go, a lot of ’em did try to go directly with the aggregators and –
JV (16:43):
Give them my book, please. If they’re gonna do that, they’ve just gotta read the book. I mean the simplest thing, Tyler, I guarantee you, they’re not doing an add back for Helium10 or Jungle Scout. Those are expenses that don’t carry forward ’cause the aggregator already has them. You’re gonna go directly to an aggregator, at the very least do an add back for that, but they’ve gotta do it for cash back. I’m sure you’re helping them and educating them, but –
TJ (17:04):
Well, it’s funny, we’re trying to, I can’t tell you how many times last year, Joe, I just like got on a CFO call and they’re like, oh yeah, by the way, I’m under LOI. I’m like, wait a second. Why do you, why do you pay me to be on your team if, if I’m not even a part of the discussion? But I will say this. A lot of those, a lot of the guys that sold January, February of last year are really, really happy with both the multiple and the stabilization and earn out payments. A lot of my clients and even friends that are not clients that sold like towards the middle of the year or even had deals fall apart in the middle of the year are pretty unhappy for several reasons. And one of them you kind of touched on, so I just wanna ask you directly, like how you would advise handling this. Like, defining success for like an earn out, like what’s the formula and then making it like objective or transparent enough that you can’t get jerked around, like you kind of alluded to a minute ago? Like any advice for listeners who are like, “I, okay, I didn’t, I wish I had hired Quiet Light. I didn’t, and now I’m doing this on my own.” Like what’s the thing that needs to be in there that gives us clarity on what’s gonna happen in 12 or 24 months.
JV (18:04):
Yeah, no, it’s a great question. I can’t remember exactly the section of – it’s towards the end where I talk about all the different types of deal structures.
TJ (18:11):
Okay.
JV (18:11):
That, again for 18 bucks, if you’re gonna sell directly by the book, it’s all in there. You don’t know what you don’t know. Like I will not try to do all of my bookkeeping, accounting, ’cause I don’t have that expertise. You do. I would hire you instead. Right? It’s important to understand that and do that when you’re selling your business on your own. But as far as general structured deal things that I look for on an earn out, you wanna keep ’em short, and you wanna keep ’em simple, right? The more complicated they are, the more work it’s going to be every month to calculate your earn out.
TJ (18:50):
Right.
JV (18:51):
And that’s one of the key things right there, every month. You don’t wanna get paid on a quarterly, semi-annual, or annual basis on an earn out because you’re gonna be wondering if you’re ever going to get paid. You’re not gonna know unless of course you have View Only access to Seller Central. So monthly payouts. Number two, keep it simple and keep it short. So monthly payouts, less than 36 months. And let’s say that the goal is to get you paid $300,000 over a 36-month period. What you can do is take your total revenues for the trailing 12 months and project out revenue for the next three years and say, “All right, well, if I just take 2% off the top, 2% of total revenue, is that gonna equal a hundred grand over the next each year for the next three years?” And project it like that and calculate it that way. So my first preference would be a percentage of total revenue.
TJ (19:46):
Mm-hmm.
JV (19:47):
So incredibly simple. All you gotta do is log in to Seller Central. There it is. Unless of course they’ve got, you know, other revenue channels. Most aggregators are gonna push back on that ’cause they come from the private equity world, and they’re gonna look for, you know, a percentage of gross profit, right? And what you need to do is just make sure that any calculation that they’re gonna look for to pay you a percentage of whatever number that’s in there, but they cannot pad the expenses. And I’ve seen that happen in the past where, you know, all of a sudden expenses get blown up, and they own multiple businesses, and you don’t know if those expenses are really being applied to your business or to the new content site that they’ve launched or whatever it might be. So it’s gotta be simple and it’s gotta be short.
TJ (20:37):
There’s like direct padding of the expenses, like I’m gonna put this contract that doesn’t work on yours, but what I’m seeing is just a non – it’s not even explicit, it’s just that they’re bad at managing marketing and advertising relative to the owners that were in there prior to them. And so the reason I think what you said, if you, if a seller out there has the ability to push back and get a smaller percentage of revenue, which is really easy to validate, you’re not playing any games with cash flow, you’re not playing any games with whether the TACOS or ACOS tripled during the first 90 days of the new integration into the aggregator, which is by the way, I’ve seen doubling TACOS numbers for a number of the aggregators that integrate brands, because they’re figuring it out. It’s almost like if you hire any new agency, there’s gonna be a learning curve. And so you just wanna make sure, I think, Joe, if I’m hearing you correctly, you wanna make sure that you’re negotiate to not have to pay for their learning curve, right?
JV (21:31):
Absolutely. You know, I’ve seen on occasion, for some reason with supplement companies, when new ownership transfers, even though the buyer was talking to the supplement company, you know, in advance of closing, all of a sudden after closing, you know, the cost of goods sold went up by 10%, you know? So that is sort of out of the seller’s control, out of the buyer’s control. That’s above the gross profit line, right? So anything above the gross profit line, it’s a little bit, you know, uncontrollable, right? And it’s, you know, paying for their learning curve. Just because these guys are well financed, well educated, charming, and good looking doesn’t mean they’re gonna do a great job managing your business. Don’t put your kids’ college education being paid for in their hands. Right? ‘Cause if you run the numbers, if you’re selling a business for 2 million bucks, they’re gonna have a stability payment of 10%. It’s 200 grand, right? That’s a couple of college educations If you’re going to a good state school. Don’t trust them on that. Do it above board, make it really simple to calculate and within your control. And I like that. Don’t pay for their learning curve. ‘Cause they they’re gonna have one, and they’re gonna make mistakes that you never made.
TJ (22:48):
That’s so good. So, okay. So I’m glad Quiet Light is up. Seller Accountant’s having a pretty good beginning of our year also. But there are some like headwinds, you know, in the market still waiting on supply chains to kinda loosen up, seeing some pressure on ad budgets across our portfolio. Where is your, what is kind of the Joe Valley mood right now about the market? And then what do you, if you were gonna prognosticate the next 12 to 24 months, what are you seeing in this ecosystem that we should be, have on our radar?
JV (23:16):
Yeah, man. I’m most of our transactions are not SBA loans or sold to aggregators. So in our situation, I can only talk with a crystal ball with the data that I have from our transactions. So, you know, 70% of our deals are not sold to aggregators. It’s fine. And of that, you know, there might be maybe 10% that have SBA loans associated with them. And so I’m thinking there in terms of the rise of interest rates, money’s gonna get a little tighter.So, you know, I think that we’re a little insulated in that sense. You know, I think that some of my partners, some of my advisors are concerned, you know, with money tightening up and things of that nature and people’s margins getting tighter that we’re gonna see a downturn in transactions. I know though from personal experiences and as an entrepreneur, when you see a tightening of margins, and you’ve got it with your clients, they’re not making as much money, and they’re not able to sustain the same lifestyle or hang in there for things to turn around in 24 months.
JV (24:32):
So I think there will be a bit of a slowdown because of, you know, tightening of lending. But at the same time, there’s gonna be more people that will come to the table and say, I’ve had it. I gotta get out. I can’t, I’m over leveraged, things are trending down. Margins are tighter. I know I’m not gonna get as much value, but please, help me move on. Help me get what I can out of this business just so I can breathe and prepare and launch my next business with all of the knowledge and experience that I have and a little bit of money in the bank. So I think there’s gonna be a balance. I still think we’re gonna grow 25% over the year, year over year, because I – that’s a slowdown for us, right? We’ve done 55%. But over the next couple of years, I could see 25% still being a conservative growth for us. And I think the aggregators, some of ’em are are gonna merge. Some of ’em are gonna implode. Some of ’em are gonna, you know, kick the bucket. Others are gonna just really hone their own craft and continue to do what they’re gonna do. They are getting much pickier. I can tell you that.
TJ (25:36):
Yeah. And it’s kinda what you would expect. They’re getting better at due diligence. We’ve done due diligence for, for a number of the investors that are out there, and Joe, I can’t tell you, like the deals that I sold them saying yes to a year ago and the deals they’re saying yes to now, like you just alluded to a really, it’s just a narrowing focus. Part of it is that they didn’t know. I mean, I don’t know if you did what I did, Joe, but like, as the aggregators were coming out, I interviewed about 50 of them. And I asked them the same question, at least one of the same questions, which was, what is your thesis? Like, what is your strategy for acquiring ’em? And most of them really didn’t know, like they didn’t have a strategy. It was like, what do you mean, strategy? We’re getting money. We’re gonna deploy it and buy these assets.
TJ (26:13):
And they’re obviously realizing, “Oh, we actually have to be good at something. We actually have to either know how to address a customer or be really good at PPC or have a supply chain thing nailed down. And we’re not gonna be good at everything.” Even the largest guys out there have tried to be great at everything right away. And you know, you can hire a thousand employees and not be great at everything. Right? And so there’s a lot of learning that that’s coming out of it.
TJ (26:35):
And I just wanna say, you said something there, I think is really important advice. Like guys don’t fall into this, like, I don’t know if, like, from your beginning business course, this sunk cost fallacy where, okay, your business is trending down. But when you really look at the guy in the mirror, you realize I’m like three months from burnout and I’m not gonna be able to do this for much longer. Don’t be so white-knuckled on the value you thought the business had a year ago that you let it slip from something really good to really terrible where you’re dead before you can actually get it sold. And so I just, I think it’s important to have a little bit more of an objective investor mindset. Although, although we love our businesses. I love my business. But if it starts declining at some point, I may have to make the hard decision. And by the way, if it’s declining in part because I’m running outta gas, I might wanna make the decision to go ahead and get out.
JV (27:26):
Yeah.
TJ (27:27):
Before the 24 month market re-up where I’m gonna get the same kind of multiple or whatever that I got, that I might have thought that I kind of, sort of, might have gotten last year. I mean, right? Isn’t that kind of what you’d say also, Joe?
JV (27:37):
Yeah. I mean, you’re human, you’ve got a life, you’ve got a family. You know, if you’re burning out, accept it, know who you are, you know? Look in your heart and say, “Alright, I wanted $2 million. It’s worth 1.3. I can take that. I can take that. I can take that, set some money aside, take a breather, rest, recover, not stress about the market as much, and build a better business next time with all the experience that I have.” I think one of the most important things that people can do to offset everything that we’re talking about first and foremost is set a goal. How much do you wanna sell your business for? And don’t gimme this crap that you’re not gonna sell your business and you’re not gonna exit your business, ’cause you’re going to. Everybody’s gonna exit their business.
JV (28:23):
They’re going to turn the key and walk away, which I’ve done before. They’re gonna sell it, which I’ve done before. Or you know, they’re gonna get a divorce or they’re gonna die. Right? Pass it on to the family, whatever it might be. You’re going to exit some way. So set a goal. How much do you wanna sell the business for? When do you wanna sell the business? How do you wanna feel when you sell that business? Right? And then reverse engineer a path to it. So let’s say you wanna sell for 5 million, know what it’s worth. Know the valuation process. Get a pretty good handle on that so that, you know, you’re working towards something instead of just grinding it out every day. And I’ve done that. I’ve been self-employed since 1997, right? I’ve ground it out way too many years in a row. I’ve had losses where I’ve been excited, tax years where I’ve been excited about a carry forward loss, right? Most entrepreneurs have had that experience. Try to avoid it.
JV (29:15):
But when you have the written goals, you are more likely to achieve them. If you write them down, if you detail them, if you connect with somebody like Tyler or myself and give an update on them on a regular basis or a colleague or a friend, you’re 76% more likely to achieve those goals and maybe offset the risk of market downturns. We’re all gonna have tough weeks, months, and years as entrepreneurs. When you have the written goals, it’s gonna help you get over those tough days, weeks, months, and years much easier. So that’s the first thing I would do. And then, you know, after all of that, if you’re still at burnout phase, which we’re all gonna get to – look, I’ve been doing what I do now for a decade, right. I joined Quiet Light after I sold my own business through Quiet Light. I joined in April of 2012. So it’s been a decade. I’m tired, folks. Do I have an exit plan? Do I have this all in my head? Do I have written goals? Have I talked to my partners about it? Hell yes. I talk the talk. I walk the walk. I know what my plan is. And I have trained myself for it and planned for it. And when I’m ready, I’ll be able to execute that. And it helps me get through the tough days and weeks I still have as an entrepreneur. You guys gotta do the same thing.
TJ (30:34):
Yeah. And it also makes you able, if you have that number, this is – you said, what Joe just said is gold, guys. Make sure you grab that. But having your number, knowing what your objective is for this investment will allow you to avoid being greedy because you fear missing out. So we had a couple of brands – we had a, let’s call him Billy again, Joe. We had a brand last year where Billy got the offer he wanted but wasn’t sure it was the offer he wanted ’cause he thought he might be able to get more and said no to it. And then the market took a bit of a turn. Billy then got an offer from the same investor for an entire X less five months later, went through the most terrible, you know, four-month due diligence and finally did get paid but did not get paid what he would’ve gotten paid with a 45-day closing window seven months earlier. And it’s because he didn’t hold firm to what his objective was for the investment. He got his number, they offered him his number, and he was like, well, I could probably get more. Let me go back to the pond.
JV (31:36):
I had this same conversation a week ago. I’m in a new office space here, that’s why my background’s blurred, and I ran in to somebody. I don’t often meet clients locally. Right? But this particular person lived in the next town over, and I knew, he sent me a note when he saw the sign up on the window here and said, “Hey, we’re you know, neighbors in terms of office suites.” And I checked in with him. I listed his business about, I think it was fall of 2020, and initially for $5 million. Right? And I got him five, and he said, “You know what? I want six.” I got him six. He said, “You know what? I’m gonna do a deal with my neighbor. They’re gonna buy in half the business. They’re gonna operate it. They’re gonna do all this stuff.”
JV (32:21):
So I’m like, cool. All right. You know, I’m not gonna hold you back from what you wanna do. And he said, you know, I asked him how things were. He goes, “Yeah, we should have sold it. Things took a downturn. Things took a downturn.” And you know, he’s got another business that he’s running, and that’s why he sold to the neighbor. But he’s regretting not taking those chips off the table. He got greedy, and greed generally doesn’t work. I’ve even personally adjusted my numbers. You know, in terms of, even though we grew 85% year over year, I’m adjusting my numbers because I don’t think I can hang on that much longer. Right? I have personally studied my own level of incompetence over the last 20 plus years as an entrepreneur, Tyler. And Quiet Light is getting to the point, you know, we’ve got 15 advisors and another 15 support staff. We’re in three or four different countries, right?
JV (33:15):
And decisions are not as easy as, “yes, no, do this, do that.” It takes, you know, days of conversations, and it’s just driving me nuts. Right? That’s not my skillset. So I’ve shifted my focus in the business onto things that I enjoy and that I focus on really well. And I’ve helped take this business from, you know, barely doing anything to an eight-figure business. I think it could be a nine-figure business, but I’m not sure if I’m the guy to get it there. Now I’m not the guy anyway, I’ve got a business partner. But that’s one thing I recommend people do is that they really look back at their history of entrepreneurship, whereas in business, and think about what you really excelled at and what you really enjoyed, and are you actually doing that now?
JV (34:03):
You know, when I ran my own e-commerce business, it was me, my developer, my lack of skills at PPC, you know, with Google. And I had to learn that all my own. Right? And I don’t like learning that stuff on my own. And I did okay with it. I built it, I sold it, I exited, that kind of stuff. I did okay. But prior to that, I was in the middle of transactions where I was the media buying agency, and I’d place a lot of media, and I was spending a hundred grand a week, almost a half a million dollars a month of other people’s money, and my job was to, you know, keep the client and the call center happy with each other. At the end of the day, I helped their businesses, and then it helped mine, and I really excelled at that. And then I just did online marketing on my own. And I did okay.
JV (34:49):
And then I did Quiet Light brokerage where I’m in the middle of transactions again. And I just realized this the other day by listening to a podcast, like damn, I’m doing what I did 20 years ago. And that’s why I’ve really excelled here at Quiet Light. And so I think people really need to look internally at themselves, understand what they’re strong at, understand what they’re weak at, and make sure they don’t promote themselves to their own level of incompetence because that’s when they’re going to get burnt out and tired, the business trends are not gonna go up anymore. They’re gonna start to plateau and go down, and that’s when the multiple’s gonna go down pretty rapidly as well.
TJ (35:23):
I know, it’s like the classic “know thyself” is so important. Love it, dude. That was gold. Grab that. Hey, I wanna ask you a quick personal question, and then I’m gonna ask you about some habits and hacks. So your kids are, I think 18,20, is that right, Joe?
JV (35:35):
That’s right.
TJ (35:36):
So we’re either there or we’re on the verge of pivoting into empty nesting. And I just wanna ask you, how’s that going for you and what is, how has that adjustment been for you and your wife?
JV (35:45):
Well, we went to signing day yesterday, and my son’s gonna run track at Davidson College, which is a Division I school right here in town. He’s still gonna go live on campus, and he’s our youngest. So it’s, easier because our youngest is, you know, gonna go off to college, you know, on the other side of town, but still at signing day yesterday, at the school, not Davidson, they can’t do it at Davidson, so we did it at our school with all the high school students that are going to play sports. My wife still tears up and then she tears up, and I’m almost close to tearing up. So I still think it’s gonna be hard. You know, I just moved out of the office. I’ve had a home office for 20 years it feels like, and with the pandemic and not being able to see people, I just am like, “Honey, I love you, but I gotta get outta here.” And this morning when left, you know, I left and as soon as the door closes, I hear her like cheering like she won the lottery or something ’cause I’m finally out of the house. Right?
TJ (36:47):
Yeah. Right.
JV (36:48):
She’s loving it. But now like, I’m looking out a couple of years where I’m, we’re gonna be empty nesters. I’m gonna be around a lot more. I may be exiting, you know, much of my position here at Quiet Light. I don’t know what it’s going to be like. But I’m not overly worried about it as being an empty nester. I’m ready to move on to my next adventure or getting close to moving on to it, and from what I’ve learned from the last decade of working with entrepreneurs that have exits and sometimes jump right into the next one, even though they could have not worked at all for the rest of their life, is they didn’t take any time off, Tyler. And that is something I’m committed to. I’m saying that I’m not going to take on anything else for at least a year to just fully rest and recover from a decade of grinding it out and make sure that whatever I take on suits my new lifestyle. And it’s a bit of a situation for me because, damnit, I just wrote a bestselling book, and from that, I should be doing all sorts of promotional things and all sorts of things. You know, there’s a new podcast there as well I could, could, could, could, could do so many things, but just because I can doesn’t mean I should.
JV (38:11):
I need to do what’s right for me. I need to do what’s right for my health and my family and not do things for my ego, which would be, damn, I could really push this book to the next level. I could do a course. I could do another podcast. I could go on speaking circuits and this kind of stuff. And when I was younger, Tyler, that’s who I wanted to be. That’s what I wanted to do. You know, if I wrote the book five years ago, it wouldn’t have been as good, but it might have been more timely because, you know, I would’ve had more energy to do all of those different things. Now I don’t care. I’m not, you know, whatever. Whatever. If you wanna buy the book, buy the book, it’ll be the best 18 bucks you’ve ever spent, in my opinion, if you’re an entrepreneur. If you’re not gonna buy the book, then that’s alright. It’s okay. It doesn’t need to be a Wall Street Journal bestseller.
JV (39:06):
By the way, you could buy your way into being a New York Times or a Wall Street Journal bestseller. You could – just like people launch products on Amazon through, you know, launch services where they have groups of people that will buy your product and give you reviews, there’s the same damn thing. There’s a scam for everything, you know? It’s just ridiculous. So if I wanted to spend 50 grand, I could be a Wall Street Journal bestseller. Simple as that.
TJ (39:34):
That’s good to know. I’m gonna file that away for the next time I –
New Speaker (39:36):
What does that do for me?
TJ (39:39):
Well, and I hope that I will be able to practice the wisdom you just said if – ’cause I definitely, the first business I sold, we closed on Wednesday, the 31st of January, I took my family camping for two days, and the next Monday I started my next business, which is Seller Accountant, right? And so I’m sincerely hoping that – and I’m not really quite ready to sell this business for several years now, but I’m sincerely hoping that I can take your advice maybe a decade earlier than you did, I guess. I’m eager to learn from your experience. Thank you for sharing that, man.
JV (40:09):
I talked about Ramon Van Meer on a number of podcasts. Ramon’s now a good friend of mine, but I sold his company for just under $9 million, and the buyer headed out to California for closing and so on. They’re in the same room. He was so impressed with Ramon, with his whiteboard and goals and all this other stuff. Ramon, we closed and Ramon had, you know, just under $9 million hit his bank account that day. But there was no celebration, no popping of champagne. He just pivoted over to his next business that he was already working on. And in hindsight, we’ve talked about it, he made a mistake. He really needed to take some time off to make sure he chose the right next adventure. ‘Cause he ended up buying two or three additional businesses from Quiet Light and another one from, you know, an Australian broker, and he tried a number of different things, content, SaaS, e-commerce, and it took him trying different things to land on something, but if he had just taken a little bit of time off, I think it would’ve been much more healthier for him. Because he’s, he’s, he’s struggled a bit, he’s crushing it now, but he struggled a bit afterwards because he tried so many different things.
TJ (41:22):
Wow. That’s so like – such good – listen, let’s close, we always close these episodes with a Return on Podcast, Joe. Honestly you could mention any of 20 things you just said in that last couple of paragraphs that you said there, but like, what is something that’s giving you, habit, hack, practice, that’s giving you an unusual return on investment in your life, that if you were like, “Hey listen, do this little thing a few minutes a week,” or “try this as just a either personal or business -” I’m just a big believer by the way, James Clear’s Atomic Habits, like we’re not gonna rise to the level of our goals, we’re gonna fall to the level of our habits. And so what I wanna ask you is, what’s giving you ROI in your life that you think would serve the audience, listening to this?
JV (42:01):
That’s a great question. So it’s really The One Thing, you know. It’s the book, The One Thing. When I shut all of the other distractions down – like yesterday, you know, I wrote a book, Tyler, but I’m not a great writer in my opinion. But I had to write three new case studies for a new promotion for the book. Launching the book promotion, and like I I’d known about this for three months, but I kept putting it off and kept putting it off and kept putting it off. Yesterday I shut everything down for five hours, and I focused on this one thing. And I got through it and they were awesome and I reviewed it and I had plenty of time. I had no stress. I felt a great deal of satisfaction because I was productive. So what I would suggest is you just stop trying to multitask, folks, and put the blinders on, shut your emails down, shut your notifications down, and focus on that one thing. Block times on your calendar to focus on that one thing. And my advice, there’s a lot of “one things” that you must do in your own business. My advice is that you make sure that for two hours, at least two hours, and you might want to be more, focus on reviewing your financials that it presented to you by your e-commerce bookkeeping company, Seller Accountant. Focus on reviewing those every single month so you understand where you are in your business.
TJ (43:27):
That’s such good advice. Yeah. It’s funny. That’s been a recurring theme, by the way, Joe, the last couple weeks has been this – there’s a book called Deep Work by Cal Newport. There’s a book called Stolen Focus, I think the guy’s name is Johann Kari, or Hari, or something like that. But this theme of like our ecosystem right now is engineered to distract us constantly. We’re constantly getting pings, notifications. It’s funny, I just got a ping, right as I said that –
JV (43:51):
I heard it –
TJ (43:51):
It’s amazing how much we are just constantly getting distracted, and it takes a lot of proactive energy to shut the noise down so that we can actually do deep work. And I would just affirm that, Joe, that if I can force myself to take a half day, for me it’s – by the way, there’s a lot of different ways to do this, but for me it’s been like a half day where my team just knowS I’m not gonna reply to slack, I’m not gonna reply to email. I love you, batch your questions, I’ll look at ’em later. My wife knows, babe, if it’s an emergency, call me, but if not, I’m gonna be in the zone, that I can get a ton of work – like I’m almost like, I can see it in your face, like, “I’m like amazed, I got these three case studies done, and they were really, really good, and I’m happy with them.” You can blow yourself away with how productive you can be on the most important things if you just do the one thing.
JV (44:38):
Yeah. It’s not – and look, I joke that in high school I was in remedial English. Mark is, my business partner, he’s an amazing writer. His emails are just incredible. So he obviously had Ms. Henderson who taught the smart kids in English. I didn’t, I had Ms. Lane. That was remedial English. I don’t know where I’m going with this, but it’s not a complicated book, this One Thing. That’s where I was going with it. I like simple books. Who Moved My Cheese?, The One Thing, anything that Gino Wickman’s put out with EOS. It’s not complicated when you – you know, I have Atomic Habits. Ramon actually bought it for me. I haven’t read it yet. I started to read it. I started to listen to it. I’ve gotta get into it. But I think that it’s all of these books that we all read and talk about are different iterations on the same thing.
JV (45:29):
Shut the world out, set up good habits, and get to work. Stop trying to multitask. Put your phone down and focus on getting tasks done and big projects done, and man, it just feels really good. You’re gonna be much more productive. You’re gonna be less stressed. You’re gonna be more focused on the important thing, which is your family life when you’re back a home, right? You can leave this crap behind and just focus on family instead of having the stress of all that stuff that you didn’t do and you have to do.
TJ (46:02):
Love it. Love it. Love it. Love it. Guys, as we close the episode here, Joe Valley, one of the partners at Quiet Light brokerage, Quiet – isn’t it just QuietLight.com, Joe, is that the website?
JV (46:12):
It is QuietLight.com now. We dropped the “brokerage” a while ago.
TJ (46:15):
Get rid of that brokerage, dude. I love it. And then The EXITpreneur’s Playbook. I just wanna affirm again what Joe said. I’m a nerd. I read a lot, and this is probably the most comprehensive book on exiting, and specifically e-commerce exiting. There may not even be another book out there that does it anywhere close to what this one does. So definitely pick that up. Joe, anything else you want the audience to hear about how they can get ahold of your team if they’re looking for help?
JV (46:37):
There’s a variety of different things you could do. I mean, you can go to EXITpreneur.io. On the Partners page there – you know, people are always saying, who do I need for e-commerce? Who do I need for an attorney? How do I raise money? How do I find a great agency that’s gonna help me? They’re all on the partner page there. At EXITpreneur.io And I’ve come up with something I call Two Minutes Tuesday. I’m gonna give you a little nuggets every Tuesday. They’re all over social media. You can find me on Instagram. You can find me on LinkedIn. You can find me on Twitter, all the different places. But more importantly, set your exit goal with a dollar, date, and feelings, reverse engineer a pathway to that by getting a free valuation. If you don’t like me, if you don’t like Quiet Light, go with who you like, get an actual valuation done by a professional.
JV (47:22):
The book is good. It’s damn good. It’ll get you a blue belt, maybe a light brown belt, but it’s not gonna be a black belt. You’ll still get your ass kicked by the aggregators ’cause they’re not gonna actually work in your best interest and pay you maximum value for your business. Get a real valuation of your business so you know what the weaknesses and strengths of it are. ‘Cause it’s not all dollars. It’s a lot of the different strengths and weaknesses of the business that are gonna sway where in that multiple range your business is gonna fall. So go to QuietLight.com, click on the valuation button, get a free valuation. It’s there. It’s helpful. It’s educational. Nobody’s gonna try to talk you into anything.
TJ (47:58):
Beautiful. Beautiful. And with that, we’ll close the episode. Thank you for listening to Return on Podcast with me. Tyler Jefcoat. Hey guys, if this content serves you, would you consider subscribing, sharing it with your friends, liking our channel, and the like. We’ll talk to you next week. Until then, hope you guys kill it. Take care.