The Secret Life of Business Brokers: What They Don't Tell You About Selling Your Company with Sherrye Coggiola

0:02Hi, and welcome to this week's episode of the Epic Entrepreneurs podcast where we are all about helping business owners just like you achieve success. So we don't do fancy smancy. We don't do flashing lights. We don't do a lot of things that a lot of podcasts will do. These are just real stories about real people and their entrepreneurial and business experiences. We go into their wins, their challenges, and their learnings. So we hope you enjoy it.

0:36hey there welcome this week's episode of epic entrepreneurs i am super excited this week we've got sherry cadiola of trans world of western north carolina welcome to the podcast sherry thanks for having me bill hey what the heck is trans world of western north carolina anyway Thank you for asking. We are a business brokerage. So we actually help small businesses, we call them main street businesses, to exit, expand or grow. Our parent company is United Franchise Services out of West Palm Beach. they actually partnered with a very large business brokerage about 15 years ago in Florida and many other border areas you were able to buy a business and obtain a visa so there were lots of businesses changing hands in West Palm Beach and there was this large united franchise services that had started with Sinorama and Minuteman and since has hundreds of franchises under their belt and they saw their franchisees starting to think about transitioning.

1:44And they said, well, we should get in on that. And they partnered with this large business brokerage there. And here we are all over the world now, tens of thousands of offices and agents, and just a great network of really, really solid folks. So Sherry, how did you get into this? I know that this is not your first gig. Well, it's new to me, Bill. Actually started in December. We, like many of us in this area, were watching Wednesday, Thursday, and then Friday prior to Helene. Um, my husband and I owned the Biltmore, uh, the cantina in Biltmore village. And, uh, we were not, uh, we were, we were used to some flooding and, uh, had some, some operational stuff in place.

2:29My husband's actually a disaster expert all over the world. So, um, he was out there being prepared those days before and, uh, Friday came and we realized it was all gone. So there was a lot of fetching water and pranking the radio to listen to our wonderful local Clear Channel station and figuring out what am I going to do now? Luckily, all our staff was safe. And we had had 15 years. It was a great run in the restaurant business. We actually got into it in the disaster of the recession as the previous tenant couldn't pay the rent to my mom that owns the building. So we worked with the local staff there and cleaned it up and worked with our amazing guests and had a wonderful business.

3:15But it's gone. And we spent$80 ,000 of our money to clear it out and realize that it didn't make financial sense for us to rebuild. So what am I going to do? I thought about consulting with other restaurant owners because I was really good at it and was able to make a 25 % profit and sit down restaurants, which is pretty much unheard of. And then that involved a lot of travel, which I didn't want to do. So then I thought, well, I could sell restaurants. I have a background in commercial real estate and marketing. And that kind of led me to Transworld. I had been, my husband and I had been looking for another opportunity, another type business with real estate, not necessarily restaurant, for a number of years.

3:56We did not end up consummating that deal with Transworld. But in the time I got to know, sorry, that's my dog. I got to know JT, who is essentially my broker, and went to him and said, I think I want to do this. So here I am. Got it. Got it. So what's the big why here? Hang on one second.

4:32That is a Rottweiler trained to ring a bell to go out and she would not have stopped. So the big why, the big why is that small businesses are important and running them is difficult. most people don't know how to sell them and they need a local trusted advisor to do so so that's my role and I'm absolutely loving it I'm new to it I have my first closing this week an electrician that essentially was ready to retire and walk away this summer and we got him over half a million dollars and he's energized he's staying for three years with the new owner on something called an earn out there's about a thousand and one ways to sell a business And there's probably 6 ,000 plus types of buyers to buy any type of small business.

5:19Yeah, a lot of people don't understand that. They think, well, maybe I can't buy a business because let's talk about that a minute because they don't have the money. What they don't realize is, I mean, I've helped people buy a lot of businesses with no money. So maybe let's talk about that a little bit. So I've been so amazed at the benefits of the SBA and obviously Small Business Association, right? That's what they're about. They're about assisting small businesses in many, many ways. I worked as a mentor with SCORE as a division for their with counseling people and now getting to work with these SBA lenders.

5:58They are not financing the buyer. They are financing the business. And Bill, as you know, the business has a value based on its last three years of tax returns. And many of us as small business owners, we're running a lot of personal expenses and things through that business. And what I get to do as their analyst is I get to do what's called a recast. So I will be taking their tax returns and their P &Ls and obviously their top line revenue and their cost of goods sold, the things that can't be changed, their rents, utilities, etc. But ultimately, there's some other what we call seller's discretionary earnings in there.

6:35That might be their cell phones, their gas bill, their vacation, their research, etc. And the SBA and private financers as well allow me to add that information back to get to a bottom line figure. Again, the seller's discretionary earnings. And we do that as a multiple. It's somewhere between 1.2 and 3.5 for these smaller Main Street businesses. And traditionally, you can get not only close to 100 % financing from the SBA, but they'll also loan you working capital. Yeah, and there's plenty of other places to get money as well. The SBA is the obvious one for most of these. That's what it's for.

7:20It's for this. Yes, it's for small business. A lot of people think, well, it's supposed to do all this other consulting and everything. It's really a lending organization. That's really what it's about. So, well, let me ask you a couple other questions about it. This can be about what we're doing now and other things as well. If you had to start over in business and maybe this is what you've done, what would you do differently? I would I would have more mentors around me. I would, and I have always done that, but I would surround myself with people that have done things, right? And I would ask for advice and I would say, what are the things, just like you asked me, what would you have done differently, right?

8:00And that's what I love to share with especially new and aspiring folks that are, which I deal with a lot of, that are trying to get out of W-2 employment and figure out how to become an entrepreneur is the new word, right? We used to call it self-employed. But the bottom line is there are so many people out there that are so willing to help explain the mistakes they've made and just help you not make those. You're going to make your own for sure, right? But if you can just not make all the ones that I made, you're going to be in good seed. Yeah, I think I know early in my business career, I got advice.

8:42It sort of just came without asking for it. But I could have been more proactive in asking for help. Well, and Bill, look at the resources out there that you and I didn't have. You know, the things that are available now. I've been playing with the Gemini and the AI, and I was in advertising for a long time, so I like adding ad copy, but I like Gemini better. Oh, yeah. Yeah. It's crazy, and there's software now for everything. You don't have to build software for your business. There's something out there already that's ready to plug in. I mean, it's pretty amazing. Well, I think this is good because I think a lot of people might be useful for people to know, what are some of the common misconceptions that people have about owning and running a business?

9:39That the grass is greener? Yeah. You know, it is such a fulfilling thing to own your own business. I mean, it's like raising a child, right? And for a lot of these people I'm dealing with, there's some emotions there. But the bottom line, when you go to sell a business or you go to buy a business, it's based on the last three years of revenue, period, end of discussion. You know, we can talk about goodwill and things of that nature. There's no value for goodwill. Goodwill is a way that our accountants utilize it so we can avoid paying some taxes in the end and how we allocate the actual purchase agreement, right?

10:15The actual final closing and moving the numbers around. But when you think about it, what we're talking about, you can buy a business for one and a half to three times earnings. That means that in one year, you get all one and a half to three years, you get all the money back that you spent. And everything beyond that is profit to you. It's profit to you and your family for you to continue to ideally build upon it and the baseline that's been made there. and it's significantly less expensive to buy an existing business than to start one from scratch. You already have a lot of those kinks worked out.

10:54Yeah, 100%. I mean, it's really interesting. A lot of the grants and the government money and everything goes to people starting businesses. It's so interesting. I think a lot of that money, this is just a little bit of a rant, that I believe a lot of that money could be better served. And that's why I like the SBA piece of the government, putting it towards helping people in existing businesses or helping them buy existing businesses that they could further expand. So what do you, along the way, I'm sure you've had this, how have you balanced your personal life with the business demands that you've had?

11:35Technology and being really, I mean, we all know, Our only limited resource is time, ultimately. And time management, I mean, I do not leave things, right? I do not leave unanswered emails. I don't let my email box get full. I don't let my voicemail get full. Just staying on top of those things allows me to sleep at night. Right. And I don't know if you can't learn to manage your time effectively. It's very, very difficult in this day and age to not go crazy. Yeah. Yeah. Yeah. I think I think you hit the nail on the head there. I think that's the I think you have to block it out in ways that make sense to how you want to live your life.

12:24And and a lot of people let a piece of their life take over. And so, yeah, the business takes over the personal as rather than the personal leading the business. It's it's really it's really interesting. I mean, we yeah. In our business, we've been fortunate. That's one of the things we get to do is help people get that balanced a little bit better. Yeah, it's pretty cool. Let's talk a little bit about some misconceptions about business. I mean, I think you've hit on it already, but I don't know about you, but I run into a lot of business owners who say, yeah, I want to sell my business. And when I sit down and just do some back of the napkin stuff, I'm like, it's worth about half of what they think it is.

13:02so what are some misconceptions about and what can some people do to increase the value of their business i mean when should they start planning that my preference is we talked about that three years my preference is to get someone about three years prior to exit on average it takes about a year to sell a business yep i hope it doesn't take that long and it hasn't so far with my folks and I don't intend for it to take that long. But getting somebody about three years before they plan to exit, two years works. Just sitting down with them, going through their P &Ls. You know, most of us as small business owners, we love what we do as a small business.

13:42We do not like the numbers. We do not like the finance stuff. We do not like the P &Ls. You know, I do. I happen to love the numbers. I always have. And so one of the assets that I can bring as a trusted local advisor is really sitting down, showing them really where they are, like you said, Bill, where their value sits right now, the things that we can do to increase that value, increase the attractiveness to a new buyer. Most buyers, frankly, are looking for a business they don't have to work that hard in. You know, they think that I'm going to buy a business and I'm going to grow it and add some marketing and add some operations and it's going to provide for my family.

14:23Well, that's absolutely the case. But setting some of these small business owners up so that they are that much more attractive to be hands-off type owners versus hands-in type owners, because, you know, like an electrician, He loves being an electrician, right? That's what he wanted to do. But to sell his business, he had to be replaced by an electrician. And there are licensings and things like that involved. Well, there are ways in that three-year time for us to hire people, to train people, to replace that owner. And that is going to give it significantly more value and more interest in the open market to buyers.

15:00Yeah, 100%. Yeah, I mean, that's what we do. I mean, that's our goal with business owners when we work with them is to create a commercial profitable enterprise that works without them so that it's actually worth more. It raises that multiple that you're talking about. Absolutely. Yeah. If the business owner's got to be there, I think you were generous. I think it's maybe worth one times earnings if the business owner's got to be there. And you said, I think you said one and a half to three, and that's right if it's done right. So yeah, it's pretty cool. It's pretty cool. So what should a perspective, we kind of talked about the sellers, what they should do.

15:38What should a prospective buyer be looking for? Understanding how businesses are valued. There are, you know, we're trained at Transworld. They want us to have, you know, 15 listings at one time. They want us to take every listing that's out there. And, you know, I don't personally believe in that. I think that you owe it to your buyers and your sellers to properly price your listings and get all of the information and the due diligence done up front. That's dealing with, is it financeable, to your point? If there's a landlord situation, is a landlord willing to assign that lease at what it's at or what does that look like?

16:21I think from a buyer standpoint, I see a lot of buyers that are getting a lot of misinformation that they can lowball or throw a letter of intent out there without any kind of deposit money. I don't accept that. That's not in our seller's best interest. It's a waste of everyone's time. Like I said, when I put a listing on the market bill, I get 50 buyers the first week. I have to screen those buyers. I have to find out how they're going to finance it. What is their background? What are their interests? You know, with this electrical company, I got a number of just wonderful young men that are W-2 earners that think, I just think it would be really cool to work with my hands.

17:06Well, it takes seven years to get an electrical license. So we need to do a little research beforehand. So a little bit of research, using AI tools, using those things when you're looking, really focusing. I met with a woman the other day, and when she was seeking a business, she ended up buying a green cleaning business here in Asheville. But she was looking all over the world. She has a background, international W-2 type corporate background. And when she finally got serious, she realized, I need to figure out where I want to be and then focus on finding a business. So I think keeping your search too broad, especially in the beginning, when you're trying to learn what it's like and what is potentially out there is probably the biggest mistake I'm seeing the buyers making that don't ever get anywhere in their search.

17:51yeah it's an interesting one particularly if they're a first-time buyer if they've never bought a business before it's uh it's a yeah they really need somebody like you along to help them through the process so that they can do it right i mean it's just not um it's just not it's not it's not straightforward and for those for those that are serious i mean we offer a$15 ,000 retainer. We give some deliverables on that and they get that back when they buy a business, you know? So, so we do do that. It's again, talking about time management. I don't, I don't do that without, without it's not worth the time.

18:32Yeah, no, it's not. I wouldn't, I wouldn't expect that. That's the way most, most business brokers I've run into over the years work. If you want, you know, if you put them on retainer, in fact, I worked with a, a guy who was a marketing guy and he was looking for businesses. And yeah, that's what we did. I partnered. I was doing some coaching and I was partnering. I partnered with a guy in Virginia who was, this was in Virginia. And that's exactly what they were doing. They were just looking for other businesses so he could grow through acquisition. It was pretty cool. It was a pretty cool model.

19:06And I think it's a great model. Absolutely. Yeah. Yeah. Let me ask you some quick fire question. So EPIC is an acronym and, um, you know, or B EPIC is an acronym. The B stands for bring the energy. And I know I can tell you bring the energy. So, but, uh, what are your thoughts about energy and energy management? Hmm. Well, um, my husband and I realized, uh, we've been married 40 years and we've been through a lot of things and we work best in crisis. So when, when our life, when our life is just going easy and everything's fine and there's no family drama, we just don't do well. So I'm, I, I've kind of laughed post hurricane Helene that I think I need to find a therapist to give me whatever, whatever label it is that I have.

19:54But for me personally, I, I, I really thrive in that sort of chaos model, which is why deals, you know, these very complicated business deals and getting them to the, to the end game, right. is so rewarding to me personally. Yeah, yeah. Yeah, so I mean, you know, some people call it flow. Like I think we know that when we're in the flow, that energy, that we're more energetic. Absolutely. Like, I mean, one of the things that gives me energy is talking to people like you. So, I mean, you know, I just get energized from doing it. So, you know, and then, but, you know, setting it all up and getting it all in place is not energizing for me.

20:32Right. So that just means I need to delegate that piece of it So that I can do the things that I'm best at. And I think that's a great thing about this energy. The E stands for education. What are your thoughts on education? um again back to the assets that are on the internet that just get pushed to you once you start getting out there you know i've only been doing this since december and now you know i've never heard of alignable before for example um you know alignable i mean i was just on a you know a speed dating alignable networking thing where i met 16 people that somebody pushed towards me live like this.

21:12Unbelievable assets that are out there. So, you know, everything that, you know, I go through my update folder and I find those things that are pushed and I sign up and I put them on my calendar. Now, a lot of times I don't listen to them live. I'll go back and put them on to speed and listen to them on the background. But the resources that are out there to educate ourselves on whatever it is that we're interested in right now, it's unbelievable. That being said, you know, talking about talking to you and getting out there again after 15 years and having to network and seeing the things that are available in Asheville for networking opportunities.

21:49It's just beyond. And I've had so much fun. You know, I laugh being out of the restaurant business. I'm dealing with adults instead of adult children now. Right. I love that. You know, dealing with entrepreneurs and people that have come to this city by choice that have had to figure out how to make a living and thrive and strive and give back to this community. I'm third generation, and this close to lean, that is my other passion right now. It's just helping our city rebuild, helping our elected politicians. We can't expect them to know how to do this, but we've got a lot of assets in this town.

22:25I'm really trying to promote CBO, the Council for Independent Business Owners right now, and get some young blood in there and get some folks to join and explain to them that they need to videotape their meeting so that, you know, we can send those out as recruiting tools. So back to that energy, there's a lot of things that I have going on and that energizes me and the busier I am, the more I get done. Yeah, that's awesome. That's awesome. There's a lot to be done here. It's kind of interesting how it's going and balancing that with, there's a lot of things we could be doing that. And I think that was one of the harder things about the lean was like balancing making a living with helping all the people that needed everything that needed.

23:09It was an interesting balance for us anyway. P stands for planning. What are your thoughts on planning? I'm definitely working on that. With the new tools that I have to use and the 16 places that my brokers and people want things, that's a little frustrating for me. Um, I, you know, I've been in outside sales before and I think the, um, the, the corporate sometimes gets in the way of, of, you know, allowing those of us that have the energy to do things. Um, so I'm still learning, I'm still learning, uh, the best way to plan and keep up with all of the amazing contacts like y 'all that I've met.

23:47Yeah, cool. That's awesome. I stands for inspiration. Uh, my inspiration is helping people without a doubt. So I and that's one of the things I realized when I sat down and said, what do I want to do? What have I enjoyed doing? And I loved my time mentoring with SCORE. I did it for about six years. Unfortunately, had to stop because it's a conflict of interest. But to get to see, for example, this electrician that was going to walk away, be energized and get and I mean, literally re-energized by his business that he was done with and excited to stay for three years. There's nothing better than that.

24:22Yeah. Yeah. That's an interesting one. And I think I saw that listing. In fact, I want somebody asked me about it and I told him, I was like, look, you got to understand that you got to get licensed. It takes a little while to be an electrician. So you got to work that one out. Commitment. C is commitment. Well, that goes without saying. I mean, and I think it goes back to time management showing up and under promising, over delivering. Do what you do. What you said you're going to do or don't say it. You know, that's my commitment every day to my family, to my home, to my clients, to people like you.

25:05Yeah. Yeah, I like it. A couple more questions. What do you wish somebody had told you that you know now?

25:17Gosh. Well, I have a 30-year-old. and I'm trying to tell she and her husband, there's so much out there. There's a saying, let me see if I can tell you what it's called. There's a Japanese saying, it's ichigai, ikigai. And it's a concept that translates to a reason for being or purpose in life. It's often visualized in the convergence of four elements. What you love is what brings you joy and passion. what you're good at. These are your strengths and talents, what the world needs. This is how you can contribute to others and what you can be paid for. This is how you can sustain yourself while pursuing your purpose.

26:02And, and to me, and that was just shared with me very recently, um, as I was sharing my excitement about this new opportunity that I'm in and, and that's the key, right. And, and helping everybody to get to that. Um, it's what we're all striving for as humans. Yeah, I know. I love that. I love that. Might have to go back and listen to that and get it all straight in my head there. But that's cool. All right. So how do people get in touch with you? What's the best way for people to find Sherry? Probably my email, which is the easiest, which is S as in Sherry, T as in Tony, my husband, C-O-G-G, instead of the whole Codgiola, at T-World, T as in Ted, world.com, S-T-Codg at T-World.com.

26:53Yeah, and you're all over the place as far as search and social media and Google. I'm sure I am. Yeah, yeah, no, it's out there. No, it's super fun to be starting something new. I feel like you a little bit. I always try to add something into our business that's new or get somebody doing something different pretty regularly to just get re-energized. So that's cool. You guys do amazing work, and I look forward to the folks that do start with me three years ahead of time to refer them to you because that's a better use of my time than to be doing it. So I look forward to working very closely with you guys.