3 Hidden Risks Destroying Your Business Value with Renita Wolf

https://podcasts.apple.com/us/podcast/3-hidden-risks-destroying-your-business-value-with/id1726075128?i=1000735203343Renita: [00:00:00] I saw that eventually they came to the point in their life where they wanted to retire. There had been no exit plan put in place or contingency planning done ahead of time.
Intro: You are listening to the seven Figure Leap podcast. We're here to leverage rich relationships and smart strategies to take your business to the next level. Here's your host, Dustin
Dustin: Rieman. Are you thinking too small about your founder led business? I think this is a trap that many of us can fall in because we build these businesses organically and they're done through our own thought leadership and our own expertise.
Dustin: , And I think sometimes we lose sight of the bigger picture that we're actually building an asset. We're actually building something that we could exit one day, and even if we don't exit it, there's still a lot of value in approaching our business in this way. That is why I'm so excited to have Renita Wolf today as my guest expert.
Dustin: Renita has an [00:01:00] amazing background in exit planning and helping businesses be investment ready, and we're gonna apply her expertise today to the types of businesses that we run in these smaller founder led enterprises. So Renita, I'm super grateful to have you here. I know I'm gonna learn a ton and anyone listening to this is gonna learn an absolute , , bounty of information when we think about how to think about our businesses and how to set them up more strategically.
Dustin: For the future. So thank you for being here. I'd love for you to take the mic and introduce yourself and kind of give us some context on your background and why you care so much about this topic.
Renita: Well, Dustin, thank you for inviting me to your podcast. , Yes. , I'm an exit planning advisor and this is my post corporate career.
Renita: After spending more than 25 years working in corporate, in senior finance and other executive positions. I was heavily involved in mergers and acquisitions at points along the way, and there's some things I learned that, , I think smaller businesses are in an [00:02:00] era and that maybe could be helpful to business owners.
Renita: So I wanted to change things up and recently, the last three years I launched my own business portal partners to help. Business owners prepared parent companies to be acquired so that they can maximize the value of, as you mentioned, the asset that they've created over time and some things that they may look at.
Renita: So I bring a unique perspective because I have that corporate experience, big company experience the rigor around doing the analysis and finding targets and attractive businesses to be acquired. So I bring that perspective of what a, buyer. New owner would be looking for, considering buying a company.
Renita: So have a unique perspective
Dustin: and I liked that you have this corporate background doing this and sort of the. The larger scale way. But now you are one of us in a sense, right? You are running your own consulting business, your own, , firm, , [00:03:00] with Poe Wolf Partners. And so yeah, I'd love to hear a little bit more about sort of why you made that transition, what it's been like for three years, what we'll talk more specifically about kind of like what you do day to day and, and who you serve and how your expertise gets applied in your business.
Dustin: But I think to kind of bridge those two things, I'd love to hear a little more from. Why the shift to the, practice that you're doing now and, what's been some maybe the, highs and lows of the three-year experience of being over here in the entrepreneurial seat.
Renita: , Well I made the transition because after 25 years I wanted to do something different and I had prepared for my retirement and I'd done all the right things and it was just time and an easy time for me to transition to have my own business.
Renita: And I knew the skills that I had acquired would be very helpful and I did not want to retire. I just wanted to work more at my own speed and having maybe more of an impact in the community that I care a lot about, which are, ,
business owners. I come from a family of [00:04:00] entrepreneurs. Most of them are smaller businesses.
Renita: And they started their businesses because that's the way they supported their family. There wasn't anything really super glamorous or exciting or even big about it, but it was really important because they could support their families and participate in their communities and have a good life. So
entrepreneurs, business owners have always been people that I have a lot of passion for, so now I can help them have a bigger impact in the world.
Dustin: That's awesome. kinda what I was searching for here a little bit. I'm like, I bet there's, you know, a lot of times people are like, oh, you know, I was 16-year-old and I started this business and then I got off into the corporate land and I, just missed that kind of energy.
Dustin: And then I think with your experience, like it's a familial thing. It's part of the community that you grew up in and that you've been around and, and now you get to be part of it too. , Are there any. Specific stories or anything that jump out to you or stand out to you when you think back, like you've had these different, , [00:05:00] family members or different friends or different community members who have been through the entrepreneurial, , journey.
Dustin: And , is there anything there that you're like. Man, my dad or my grandfather or my friend from my roommate in college, they had this great business and then they didn't see some of the things that you can now help with, with like thinking about this as an asset, thinking about exit planning as part of the small business, , identity that they were, creating.
Dustin: Is there any, any kind of stories to share out in your own circle here?
Renita: Yes, most definitely. And I think this is probably where part of my passion comes from, because. Unfortunately, I saw that eventually they, , came to the point in their life where they wanted to retire. There had been no exit plan put in place or contingency planning done ahead of time, and they literally.
Renita: Closed the door and shut down the business and did not realize the asset that they had created. Many people when they're thinking about being acquired or selling, they're thinking that, oh, that only applies to [00:06:00]
large companies with, , a hundred million dollar transactions or bigger, but. It applies to all businesses because if an owner's built something that has value, there's a lot of people out there now, now in particular, 'cause younger people have less of a tendency to want to work in large corporations.
Renita: So they're looking for something that they could then use to support their family and their lifestyle. So. What an opportunity if they could acquire a business that was already successful in running and basically walk in and have almost a turnkey operation so that they could have their own business and , have their own company.
Renita: And smaller business owners don't tend to think like that. And that unfortunately what I is, what I saw, my family would walk away from it The reasons they walked away. , So I'll be real specific here, were because they thought that maybe no one was interested in buying it. Second, maybe they didn't appreciate [00:07:00] that had created an asset, but also they thought that no one could take care of their employees as well as they do or their customers.
Renita: So rather than figuring all of that out ahead of time, they, , just shut it down, which is unfortunate.
Dustin: Oh my gosh. Yeah, so I can definitely see the why kind of emerging here where you had. This personal experience, probably some regret in a sense on behalf of some of these people that had worked so hard in many cases, worked their whole life to build something and, you know, I'm sure it provided a good livelihood and it, but they just didn't see that there was a, a next chapter, sort of a legacy, , that they could be leaving for someone else.
Dustin: And obviously they could create. , An event of some sort to have some, , income or residual income to be able to serve their personal needs and their family needs. So I can definitely see how you're drawn back to this after all the experience that you gained in the corporate world to come back and be able to apply this with, normal people in air quotes.
Dustin: , You like normal, small businesses. , We're gonna get. Into sort of [00:08:00] your structure and how you work and who you work with and, those sort of things. But I'd love to get your take, , of when you would prefer to meet an entrepreneur in this journey. cause I could imagine you might maybe get the phone call of like.
Dustin: Hey, there's a health issue. We're gonna, we need to like, get out of this business in three months. And you're like, oh man, that's, tough. I would prefer to have engaged with someone at X point in this journey to help them, , before it's a crisis basically. Right. So yeah. In your words, like where do you prefer to meet an entrepreneur in this journey of the lifecycle of the business to have the best effect for them?
Renita: Well, Dustin, as you described, I'll, I'll give the worst case scenario within the best case scenario. So much like you described, the worst case is it's kind of a fire sale. The owner needs to get out because they're not prepared, , which is very unfortunate and this happens a lot. , Unfortunately, because what happens is an owner, maybe they, , started their business, they've run it for [00:09:00] 30 years.
Renita: They're reaching that age where they want to retire, and they just haven't figured out how to do it. So rather than going through what they think is a difficult process, they just shut it down as we described a little bit earlier, but also, , something that People may not think about, but I bring it up and I don't wanna be a, a really negative about it, but it's a reality.
Renita: Having an exit plan in place could be considered almost like life insurance for the business because if, . Family owned business or a solo entrepreneur supporting a family if something were to happen unexpectedly. I literally worked for a company where the founder of the company was killed in an automobile accident.
Renita: Oh my gosh. And then there can be things like. Cancer or stroke or things that happen that are just life events and they're unprepared and that really leaves their family in a, difficult situation. And then also their employees. So the best time to prepare is. [00:10:00] Five to three years ahead of time.
Renita: And I know five years, many people aren't thinking that, they think I'll, I'll get to it eventually, but three years will still give you some, uh, , enough time to prepare and why it takes so long. So determining what. Could be made better is the easy part. It's the, , implementation and the tactics to put in place that can get the company or the business onto track a track where it could be acquired by, , someone else.
Dustin: Okay, that makes a lot of sense. So the three year sort of minimum is the ideal because you're gonna come in and work your magic and sort of have a, a plan, but there's gotta be a sufficient time to implement the plan, actually get the, get , the results of the plan to be reality so that ounce in the valuation.
Dustin: , so. Let's talk about your business. 'cause I think from there then we can talk about, , different applications, you know, for the listener of like, you know, what's this [00:11:00] plan look like? Or what, what do we mean when
we say implement? What are some of the things that would be implemented or could be implemented?
Dustin: , But I think maybe the, the way to. Frame that would be to talk about what you do. And so, yeah, I'd love to hear more so at Po Wolf Partners. , I know you guys work with exit planning and you've kinda got this concept of being investment ready. , So yeah, in your words, like who do you work with and how's that typically structured?
Dustin: And I'm sure I'll ask some follow up questions, but I'd love in your words to just hear about your business model.
Renita: Well, my ideal client is a middle market, , company. these are companies with 10 to a hundred million dollars in revenue, and I, I know there aren't a lot of businesses that are able to clear that $10 million thresholds.
Renita: So I do work with smaller businesses as well and how I work with them, I begin with an assessment. I look at evaluation. , Of their company. Because what I find is most business owners, if they, , got a portfolio of investments, for example, they'll list on their personal balance sheet, [00:12:00] their business, and they assign a number to it.
Renita: So that's where we start is, okay, first, do you have a number and second. How do you know if that's the right number? So helping,
Dustin: how did you make up that number? Right? Yeah, so,
Renita: so let's start with evaluation and then we talk about, well, what, how much do you think you really need? And then what can we do to work on filling that gap?
Renita: So first evaluation, where are you at? Second, let's dive a little bit deeper and look for opportunities to make improvements in the business so that it's ready when you take it to market. And then I also have, , , for smaller businesses who just want kind of a snapshot in time, they may not get that in depth, but I offer a price point for them as well.
Renita: So I charge fixed price for each of those services that I offer. Okay.
Dustin: That's super helpful. So you're, a consultant. You're coming in and you're working with, could be small, could be, like you said, mid-market, , sized companies. So you're, to clarify for anyone who's like, kind of understands [00:13:00] this world, which I kind of understand it, but not fully, you're not a broker, you're not like listing the business and taking a commission.
Dustin: You are coming in as a consultant and, , establishing a baseline valuation and coming up with a plan for how to improve it and, and helping them understand. The future valuation or the valuation at time of sale so that they can go sell it. But like you're a consultant I guess in other words, in that process.
Renita: E exactly. I am an advisor and I do charge a flat fee because, and I'm glad you, you clarified that for your listeners. I do not participate in the transaction, so. In this financial services world, which is for some of my background, is I'm a fiduciary. So, and I do that intentionally, Dustin, because I want the owner to know that I work for them and I don't work for other people who may be involved in the transaction.
Renita: So generally, Most business owners, smaller business owners think, oh, I'll just get a broker involved. Well, a [00:14:00] broker is gonna be focused on selling that business as quickly as possible so that, , the transaction can be completed, they can collect their commission and move on to the next deal that's on their plate.
Renita: So I do not do that. I help. That's why at a fixed price, the owner prepare ahead of time.
Dustin: That's a really important distinction. I could probably understand it in layman's terms, but I'd love for you to elaborate a little bit on what is a fiduciary and why should that matter as a business owner, if I'm looking at different options for how to optimize my operations or optimize the value of my company?
Dustin: Like, what is a fiduciary and why does that matter in your, words?
Renita: Well, in my words, a fiduciary is I do not accept a commission on the transaction. So, . I am not in a hurry to help get a deal done. Yeah. As maybe other people are. and I work for the owner and I only work for the owner. Maybe if I give an example that will Yes.
Renita: Please help clarify a little bit. , One of my clients, , had built a [00:15:00] business. 35 years in the business, very successful. It was attractive to potential acquirers. His family was pressuring him to get out of the business and he got a call from, , an investment banker. He thought, oh, I'll talk to these guys.
Renita: And there he gets on the track right away to looking at a transaction, starts going down the path, and they start bringing in other people who might be interested in buying the company and. The thing kind of got out of hand a little bit because they started going down the track. The owner had given financial statements, which were accurate, but were based on tax benefits.
Renita: So when we started digging into it, the EBITDA or the earnings were a little. Less reported on their financials than what an investment banker would be looking for. And I literally, I remember we had a conversation and I told them that these guys [00:16:00] do these transactions every single day, so they know how it works.
Renita: They're gonna be talking and using words and concepts that you're not familiar with. I am because of my corporate background. And then, , I can help the owner understand. What's important and how they can interpret what's being said. And also, , for most owners, it's been blood, sweat, and tears to build these businesses and then to take it in and do a transaction and someone just kind of looking across the table at you objectively, , can take you back a little bit.
Renita: So in this situation. My conversation was with the owner. I could sit in at the table, hear what was being said and then we go back later and I could do a quick interpretation and give some feedback as to what my perception was of what was going on in that meeting. So that's, yeah, how fiduciary. That was a long example, but that's fiduciary's.
Renita: I work for the owner [00:17:00] and I'm their private sounding board but I do have the deal experience.
Dustin: That's great. Yeah, because I think if, a listener kind of puts themselves in the shoes, , maybe it's now, or maybe it's five years, maybe it's 15 years, 25 years. , At some point, if you're in this seat where you've built this thing, blood, sweat, and tears, as you said, you're probably only gonna do this once in your whole life.
Dustin: I mean, maybe two or three times at the very top, because you're an entrepreneur and you're building the business over this long period of time. Whereas the other person who's coming to be the acquirer or the investment
banker, or the VC or whatever. They do this every day. So who do you think is gonna win , in a tug of war of someone who, this is their whole life, they do this all the time, or this person who gets to do it once?
Dustin: And that's the value of having a fiduciary. 'cause you want to bring your own, experts to the table to be your advisor, to be your trustee, confident, and someone who's seen a lot of these transactions so that it's sort of the buyer's rep, right?
Dustin: or the seller's rep in this case, , 'cause the, buyer has kind of all the firepower and they have all the experience. And so [00:18:00] you've gotta have
this person behind you. And if the person you bring is. Wrongly incentivized. They may sort of be on the, acquirer side in a sense. Let's get this done fast.
Dustin: Let's, like you wanna have aligned values and aligned interest, and that's like basically the definition of a fiduciary because you have a legal and moral obligation to represent your client and their best interest, right?
Renita: Yes, yes, yes. and I would add that people who. Work on the transactions.
Renita: These aren't bad people. Sure. It's just, business. So I don't want to, , you know, look at it like that. But also in this situation, what happened is everybody left the table because what had not been originally presented wasn't what they had understood. and it wasn't quite as attractive to them.
Renita: So people left the table. And, , the owner's still working to get their business prepared. Mm-hmm. So when they do show up that they'll be in a stronger position. So that's why [00:19:00] that early preparation is so important. We think we'll just show up. This is what it is. They'll make me an offer, everything will go great.
Renita: And sometimes that happens, and many times unfortunately it doesn't. Dustin: Yeah. Well, love to transition.
Dustin: Practical takeaway side of this. So, you know, I think to frame this Renita, if, people listening, maybe their, you know, their aspiration is a $1 million business or one to 10, you know, I think that that's great and some people will certainly be over 10, sort of, regardless of that size. , You could give us the color for what, changes based on which of those, ., Sizes. You, you might, , be aspiring to. I'd love to have a conversation about like, Hey, I'm five years out. I think at some point, you know, when I'm, five years from now, I do wanna. Have an equitable, investible ready, investment ready business. What are some of the things you can control now? So if people met with you now and they got this advice, what types of things could change in order to maximize the value of the business?
Dustin: 'cause I think think people have this [00:20:00] misnomer of like, the business is what it is. It's worth what it's worth. And they don't realize there's actually a lot of things they can do. And change to influence it for the better. And so I'd love to kind of just give the mic to you and here are some of these
kind of practical things people should be thinking about and how they're doing business to maximize the exit value at some point in the future.
Renita: Right. ,
Renita: And you're exactly right. It's a loaded
Dustin: question. I know.
Renita: Well actually it's, there's easy answers, but owners do. Think that it's just their p and l, their top line revenue, their earnings, and that's all that really matters. However, and this is, would be a, a mind shift for business owners because when an investor or a buyer comes to looks at it, they're looking at the risk in the business.
Renita: So, so yes, maybe. One year you have a strong, , income statement. The year's up, everything's looking good, made a lot of profit, but that doesn't necessarily make your business [00:21:00] attracted to a buyer because they want to minimize their risk and they want to make sure that this business is sustainable. So that looking at it.
Renita: From the perspective of what's the risk and what's the sustainability of the business? Those are a shift in mindset for most business owners, particularly small business owners.
Intro: Yes.
Renita: So I can give you some, specific, so for example, on that revenue line, maybe one year an owner got a really big deal, a big customer came in, spent a lot of money, made a big investment in, buying from that company or working with them.
Renita: However, it was just a one year shot that does not make the business attractive to a potential buyer, , or if there's just one really big company or customer in the business. So what drives value for a business in that risk and sustainability? . Venue or way of [00:22:00] thinking about it is, so they would look at customer concentration.
Renita: Mm-hmm. You cannot have too much reliance on one or two clients because if it would not be sustainable once somebody bought it, if one or two clients left after the owner was no longer in the business, another is an. Overdependence on the owner for relationships or operations, but the owner's
doing everything, , and hasn't put in place, , kind of a contingency plan of who could do it if they were no longer there.
Renita: That's not a attractive, , to a potential buyer because. The owner, they wanna buy it and the owner would leave the business. So would it be able to be sustainable over time? That's an unknown. So it increases a risk for a buyer. And then, , we talked a little bit about driving the revenue line doesn't necessarily drive the value of the business because, , of those things, as I said, risk and sustainability.
Dustin: So, yeah, so [00:23:00] like client mix or concentration, owner dependence, revenue, consistency. And so maybe we can just talk a little bit, like a quick example in each of those buckets. So client mix concentrations kind of make sense. it's kind of intuitive and like you got two customers that are all your revenue.
Dustin: . Huge risk for someone to acquire that because if one customer leaves the whole business basically goes down the tubes and the likelihood of that is probably higher at the time that the owner leaves. 'cause probably they like the owner and that's the reason that they've been there. Versus you've got a thousand clients and they're all sort of evenly distributed and that hey, you know, if we lose 5% of these clients at the time of transition.
Dustin: We're still good, we're still at 95%. And so did I kind of capture that? The client concentration part of it?
Renita: Yes. Yes, that's exactly it.
Dustin: and then I'll, jump to the third one 'cause it's kind of related, but like the revenue consistency. , Obviously like you said, there could be where you got like one big deal or you, , took credit for a lot of revenue in one year and you like, but the years around it [00:24:00] actually don't look nearly as good.
Dustin: Let's talk a little bit about like, recurring revenue. Like how does that play into it? You know, someone who, you've got retainer clients or you've got a subscription based service versus, , large chunks of sort of lump sum income that are not, , recurring and how , they're coming into the business.
Dustin: Is recurring revenue a factor? I guess it's probably gonna be, well, Renita: recurring revenue is gold.
Dustin: Okay.
Renita: If, , someone's. An owner's business model has that piece in their business. , It's gold. That's what people want because it reduces the risk and it is sustainable over time. , an owner needs to be able to document that so they can show the number on their.
Renita: Income statement, but then they also need to show how they have secured and maintained that reoccurring revenue. And that's what a, during due diligence, which is when, buyer would come in and look really close at the business, they would dive deep [00:25:00] into that reoccurring revenue to make sure that what is being reported would be sustainable over time.
Renita: So a tip to. Business owners who have reoccurring , revenue is to make sure you document what those contracts look like, what the cost to get a client is into that, , recurring revenue stream, and then what you're doing to maintain those relationships over time.
Dustin: that's a very key sort of practical takeaway for, , entrepreneur, you know, founder led business, where anything they can do, , within reason to shift their, , business model and their collection model into recurring revenue where I'm gonna provide you ongoing value and you're gonna gimme an ongoing, , payment that's.
Dustin: Highly preferable to, , lump sum payments or one-off engagements because, it's more like an annuity for the person that buys it. It's like, I'm gonna continue to get these payments and there's a contract in place and there's, , terms in place that becomes very predictable, which I guess reduces the risk.
Dustin: Which kind of goes back to your core value proposition, right? [00:26:00]
Renita: Yes, exactly. , One thing I didn't talk about, and this may apply to many of your listeners, is, , service revenue. So we're service, I'm a service.
Intro: Yep.
Renita: that can be more challenging because there's not a hard product being sold for recurring revenue strain that's in place.
Renita: And, , that can be more challenging, so it needs a closer look. But something that I recommend people take a look at here is. Protect intellectual
property. So if you are, , a speaker for example, or a consultant, what do you do that's unique and have you protected that with copyrights and trademarks, for example?
Renita: So as much as you can, , do that and differentiate your product and branding around what it's called and how it's different from other, Products that are services that are available, but that can be more challenging. And , it's not as clear cut, but it's something to [00:27:00] don't just throw up your arms and say, oh, it's a service business.
Renita: Nobody wants this. No. Think of how you could create intellectual property assets. And, , kind of related to that, eventually, if you can get it to a place where you have reoccurring revenue that happens off that s.
Renita: things like that. Memberships, I would not wanna give specific advice to that, but just think broader of how you could, , get something that's a little bit more substantial in place for service business.
Dustin: Yeah, I like that a lot because I think. Anything, and it's not legal advice or any of that stuff.
Dustin: But, , yeah. And this goes kind of into the final thing I wanted to, to double click on, which is the owner dependence. But if, the business is service based, , and. It's not recurring. It's kinda like what is the value of buying this book of business effectively, right? But if the service is at least partially converted, , in air quotes to like a product, right?
Dustin: So if I take my, , may I do a coaching program, but now all of a sudden I say, no, it's not just. Me doing [00:28:00] coaching, it's a program and it has a name and a trademark, and the intellectual property is, protected. That is an asset. Right. And so it may be still a service, but just a productized service that has its own unique value that someone else could pick up and continue to make money from, versus if it's all in my brain and it's like, I just do coaching that doesn't really have a lot of enterprise value because , it's not productized.
Dustin: Is that a fair kind? Yes, that's correct.
Renita: Yes. Yes.
Dustin: That ties right into the, the last point here, which was that owner dependence, which I think is probably the one that me and our audience would be most susceptible to. , And so I think we know what that means at face value.
It's like, Hey, if you wear all the hats and you do all the things, it's kind of hard for someone to buy the business and continue to make money from it because it if you go away and kind of the whole business goes away.
Dustin: , So in some of the things that you've seen. what are some practical things we can do to force ourselves in many cases as someone who's like running the thing day to day, like how can we reduce the dependence on us as the owner [00:29:00] so that this does have more value, you know, in the future?
Renita: Yeah.
Renita: , I'll use my consulting business as an example. Yeah. It might help illustrate a point. , I opened up sole proprietor, I don't have. A large staff of people doing things. But once I figured out what it was, I did, you know, as I launched my business and how I do it, I got a trademark. So we talked about that already.
Renita: . So I said, okay, I don't have a lot of people now, but this is gonna serve me in two ways. So standard operating procedures, I say it's not this sexy and exciting part of business. Yes.
Renita: But first, if we understand what it's we're doing and we're able to write it down. So first step is that second step, maybe eventually our. Business grows to the point that we're able to hire some people to help us as there as contractors or employees do some of those things. It's already documented in that SOP that we talked about, [00:30:00] and then ideally.
Renita: Transitioning to the point where the SOPs are what is used to run the business. And as it grows and people are hired, they follow those standard operating procedures. So, , Dustin, that's a really practical Yeah. Thing. And like I said, it's not sexy exciting, but you can see that eventually over time, by doing those things, an owner could start.
Renita: Extracting themselves from the day-to-day operation of the business. And then another, , thing as you're growing a small business is think of your business. Ideally as you are the CEO of your business. Hmm. And then have like an org chart in mind. And that org chart would include like a finance person, a CFO, a marketing person, a HR person, operations person, and then whatever else may apply to the business.
Renita: Mm-hmm. But even if you don't have [00:31:00] employees, think of your business like that and you can organize it. In that way, in your mind, have those SOPs in place, start thinking about if you were able to hire into those positions, what skills and what things would you like for that person to be responsible for?
Renita: And like I said, even if you're not close to being there, just think of your business like that. Not being reactive to day to day, whatever needs to be done. Thinking of it as a larger scope or a larger business.
Dustin: I like that a lot. So have the org chart, even if your name is in all the boxes to start right.
Dustin: And that'll also help you with like, what would be the first hire, which name should not be mine first and next. , And then you can, you can imagine then as you start to actually fill in other people's names, all of a sudden the sustainability of the business and the risk goes down because most of the people involved in actually.
Dustin: Continuing and running it are not named, you know, Dustin or not named the owner's name. And [00:32:00] so when that owner goes away, the whole thing doesn't kind of fold. It actually continues forward because there's SOPs, there's structure, , and there's an organizational chart that would outlive the founder, , or the creator.
Dustin: And it's really useful. The other, the other, as you were saying that too, . 16-year-old Dustin popped up and I, I worked at McDonald's when I was 16, 17 years old, and I was always pretty fascinated by the entire restaurant, ran through a binder of SOPs. You know, it's like, and that's why the franchise model works so well.
Dustin: And the guy who, or gal who owns one of those locations. They're not hopefully the, the person shaking the fry basket. Right. but they can buy it and sell it and buy it and sell it because the whole thing runs through very standardized procedures. Now, in that case, overly standardized probably for a lot of the people listening, , in the types of businesses we run.
Dustin: But still, I think it's sort of like the idea of, you think that's a healthy mindset of like, if this had to be a franchise and I had to document everything to where someone else could. Duplicate it in other places, like would that sort of be a [00:33:00] highest and best, , example of like a super operationalized business that would have good saleable value?
Renita: Yes. That's an excellent example. And as I said, it's not the sexy and exciting thing to do, but you could see if you were trying to sell your business, you had that notebook. That a new owner or somebody interested in buying it, you can pull out the notebook, say, this is how we do it. Mm-hmm.
Renita: You're gonna right away reduce some of that risk to somebody coming in and looking at your business. They go, oh, they figured this out. They've documented this is how they do it. , And so I have a place to start if I were to buy this company. So extremely valuable and, . What people miss.
Renita: Business owners don't go into business to do this type of work, right? Yeah. That's,
Dustin: we
Renita: have to have somebody help you do it. , Yes. You know, maybe somebody in the family or somebody you don't have to pay a lot of money to do, help them [00:34:00] get it started because, , it is that important and it gives our confidence to somebody who's coming in and looking at your business.
Renita: And I know, so for example, with my, my, , business, I. Used, AI to, yeah, do my SOPs. I had the, in my own mind, what I did. I wrote it down and then I fed it in to chat. GPT said Create an SOP. If I were to hire somebody to do this for me, when I can, , what would I want them to do and how would I describe it and how would I measure the success if they were doing it that way or not knowing that it's a draft, but you can always make those better.
Dustin: That's, that's really good. I mean, anything like the org chart and you're like, here's a kind of a high level SOP for each of the roles that maybe you currently play. , Or that, you know, you have some team members playing and obviously you can go, you can get really detailed with the SOPs, but yeah, any AI is.
Dustin: You know, , masterful at this and that, that's how I've done a lot of things. Or even, you know, the [00:35:00] stereotypical sort of example of the next time you do a process, maybe it's an accounting process or a coaching process or a marketing process. Document it. Just leave a put a loom video, capture your screen share, talk your way through it as you're doing it.
Dustin: Feed that thing into AI and it'll put together a really robust SOP, which could be really useful. To hire the person who actually does this, but also you build this library of SOPs and all of a sudden you've starting to build toward ,
this saleable asset in a, in a much more concrete way because it's getting it outta your head and getting it into a process that some other human or ai, , could follow to actually get this, a similar result in that.
Dustin: , Yeah, that's super useful. So, , Renita, I'm really grateful. I, I love that we went from. Sort of like big picture, aspirational, fiduciary responsibilities all the way down into, you know, the McDonald's SOPs as sort of a really boots on the ground practical example for people listening of like real things they could
do now that's gonna make their business more [00:36:00] saleable.
Dustin: , Just make it more. Easy to run in the meantime and, and, you know, less stressful in a lot of ways because all of these best practices needed for the best possible exit are ultimately just best practices for, for running a business in a smart and efficient way, right?
Renita: Yes.
Dustin: Yeah. this is not competing with your energy.
Dustin: It actually is, , working on the business so that it can run more efficiently, even if you never sell it. But, , but yeah, I, I'm really grateful for. All of your expertise and the time that we've shared. So if someone is listening and they're like, , I need to really pay attention to this, this is something that's on my radar.
Dustin: , I want to go deeper. Like, what's the next best step, , for someone that wants to maybe get, in closer proximity to you in the work that you do?
Renita: Well, the first step is to take stock of where they're at now. And as I mentioned, this is through an initial evaluation of. What might their business be worth if they took it to market?
Renita: And that market value changes over time, depending on the economy. So it's not one number and it's [00:37:00] set, but even a, simple assessment, which I offer to small businesses, , will have Surface gaps of things that maybe they can think of. So I say knowledge is power. Yes. So they can find me on my website at Pole Wolf Partners, and then I offer a free resource that they can take.
Renita: It takes about three minutes to complete and ask some questions. It's a exit ready assessment and kind of comes back with where they are. , And maybe where they could be focusing on, and that that's free, that's also available
through my website or, , they can find me there. My email address is there as well.
Dustin: Awesome. So it's Poe Wolf partners right.com com, which is p oe Wolf without an E-W-O-L-F, , partners.com. So po wolf partners.com. You can get on there, take the initial kind of onboarding assessment. , You can schedule a call with Renita if, it makes sense with the stage of business you're in. And like you said, your email, LinkedIn, et cetera is on there If people want to, , [00:38:00] engage with you in different ways.
Dustin: Is that. Is that a, a good summary and the next steps for people that wanna go deeper with this?
Renita: Yes, that's correct. And then I also will, , reinforce that if people wanna have a conversation, there's no obligation. I'm not a. Salesperson. Yeah. And not, , committed to anything. So I'm really eager to talk to entrepreneurs about their businesses.
Renita: I get excited about that and I will stress Dustin, that all our conversation is, are confidential because, , obvious we think people about exit planning. It's kind of a sensitive thing. Yes. A lot of people know thinking that yet.
Dustin: Absolutely. Well, I love the work that you do. I love your spirit, your background, the fiduciary aspect, and how you emphasize that because I think that's really important and sometimes rare, in some of these circles.
Dustin: So, , yeah, you're in good hands with, , Renita with these things. So go to poe wolf partners.com and , continue the conversation there. Ranita, I'm really grateful for you. I'm really grateful [00:39:00] for our connection, our time today, and I learned a ton. I'm sure the audience did as well. So thanks again for being here.
Renita: Well, Dustin, thank you for the opportunity. It's exciting to be.
Dustin: The business is service based and it's not recurring. It's kind of what is the value of buying this book of business effectively. Right? But if the service is. At least partially converted in air quotes to like a product, right? So if I take
my, may I do a coaching program, but now all of a sudden I say, no, it's not just me doing coaching.
Dustin: It's a program and it has a name and a trademark, and the intellectual property protected. That is an asset, and so it may be still a service, but just a productized service that has its own unique value that someone else could pick up and continue to make money from, versus if it's all in my brain and it's, I just do coaching that doesn't really have a lot of enterprise value because it's not productized.