Transcript: We’re Buying a Business! Part 2: Narrowing the Search

 

Kathy: [00:00:00] hi, I’m Kathy rushing host of the podcast, Committed the entrepreneur marriage. If your middle name is restless and you identify with words like innovative. Dreamer changement group creative, independent, or you are married to an entrepreneur or having help you you’re both entrepreneurs. This podcast is for you.

The entrepreneurial journey can be a little wild at times like uncharted territory. Join me as I talk with others who are at various stages of the entrepreneurial process, we’ll explore the wisdom and insights they have gained while navigating the ups and downs of the entrepreneur journey. You’ll discover that there are many couples who have found ways thrive in both their marriage and business.

Hey everyone. And I’m joined again by my wonderful husband, Mark. And we’re here for episode two in a series that we’re doing on buying a business. So episode one, if you didn’t catch that gives a little bit of the background and we’re going to pick up today with the point where Mark had gone through this process of contemplating services for entrepreneurs, and then he ended up erasing this whole whiteboard.

Mark: [00:01:42] Yup.

Kathy: [00:01:43] And so let’s pick up there and tell me about why you decided to erase all of that. How you got to that point?

Mark: [00:01:53] Yeah. I had a couple of conversations with friends that are entrepreneurs and they, like me, have tried to coach and mentor and help entrepreneurs.

And, you know, the beauty of an entrepreneur is that we’re so independent and we just get out there and just get mixed up. Well, the downside of entrepreneurs is we’re so independent and we get out there on our own and make stuff happen. And, and both Jason and Randy both said, and I’m just not sure anyone,

anyone’s going to do this. If someone is really an entrepreneur, they’re going to figure it out and they’re going to seek out people to help them along the way. And so, you know, along with just not wanting to be doing all the social media stuff and everything that seems to take these days, I just don’t want..

Kathy: [00:02:53] you love Instagram, honey, you’re looking at puppies all the time.

Mark: [00:02:57] I love looking at puppies, German shorthair puppies to be specific,

Kathy: [00:03:02] Oh, I know they are pretty funny and entertaining. Okay. So you, you erase that, you literally started with a blank slate. So what was, what was the next part of this process?

Mark: [00:03:18] Somewhere in there, our friend Jason sent me a podcast. Or told me about a podcast he had heard, then I found the podcast and it was a guy who had bought a business, ended up buying several.

And part of what he was saying is that he was talking about just how many baby boomers are retiring, wanting to sell businesses, wanting to do something with businesses. And there was just this big opportunity. And we talked a little bit last time too, about the SBA right now is creating some really pretty significant incentives.

Kathy: [00:03:59] Huge. Yeah.

Mark: [00:04:00] If you’re buying a business. And so based on that, I started thinking about that and thought, okay, so we don’t, then we don’t take all of the risk of trying to get something from nothing to cashflow, we start with cashflow and we grow from there and at our age, at this time of life, that just seemed to be a much better path to go down than trying to start from scratch again.

Kathy: [00:04:27] Okay. So how did you, how do you shop for a business? Do you get on the Facebook garage sale?

Mark: [00:04:36] Not quite, I did just get on the Google and started looking around. And then I discovered there is a website called biz buy, sell, which some people say, well, the good deals don’t go there. But it’s , it’s owned by the wall street journal.

Kathy: [00:04:52] Oh, I didn’t realize that.

Mark: [00:04:53] Yeah.

Kathy: [00:04:54] And it Biz like B I Z B U Y. S E L L .

Mark: [00:04:59] Yeah. Biz buy sell. And so I just started looking. I found that there’s a bunch of podcasts out there. There’s other websites and really, I started kind of down the path of looking at laundromats first, which was interesting.

There are podcasts about laundromats. Believe it or not.

Kathy: [00:05:21] I remember you telling me about listening to this whole series on laundromats. And I was like, wow, that is the beauty of podcasts, is that you don’t have to have a huge audience, but if there are a hundred people that find that topic relevant well, You’re golden.

Mark: [00:05:40] Yeah. Yeah. And then you’ve helped people, you know? And so so I started looking at laundromats and dug into that pretty well. I actually came across a laundromat. Well, three of them for sale from Fort Collins down into Denver. One of them was truly in the hood. I mean, it was- I didn’t even stop. I did not want to stop my truck in that neighborhood.

So passed on that one. The other one I looked at, it was just going to be too far away. Then there was one, one here in Fort Collins. Well, we actually started kind of down the path on that and started talking with the guy, but what came out of that was, we’ve joked since that they call it laundering money for a reason.

I mean, it’s a cash, primarily a cash business, and it was just impossible to finance. I mean, you, I couldn’t ever get my arms around how much the guy actually made. It didn’t show up on his tax returns. The banks looked at it and said, there’s no way. I mean, we don’t want to end up with a bunch ofyou know, washers and dryers.

And along the way, a friend of ours in Granby, lives down the road from us, has a business in Denver. We were talking about this back and forth, I think back maybe during the summer, maybe last spring. And he said, you know, I, I think you’re going to need something a little more intellectually challenging than a laundromat.

And I, you know, I heard that and thought, you know, that’s probably true because, you know, it’s the desire part of this is the desire for me to lead an organization again, to grow an organization. And a laundromat was going to be if I found the right one, it could be an interesting investment, but I wasn’t really looking for an investment.

I was looking for a business.

Kathy: [00:07:35] And I remember us talking about that and about some ways to create community, especially with the one in Fort Collins. And you have a lot of people that are living in the margins sometimes that utilize laundromats. I mean, we have used our fair share when we go camping or whatever, but there are a lot of people that rely on that.

And so thinking about ways to build community and actually be part of the community, because we were already in the process of building a house here in Fort Collins. So, so that was an interesting exercise and it, I mean, what I remember about the early conversations was, you were looking for an alternate-

we were looking for an alternate source of income. So it wasn’t as clear at the time that you wanted to build another organization, but part of this process helped clarify that, right?

Mark: [00:08:34] Yep. Very much so.

Kathy: [00:08:37] So you kind of wrapped up that kind of a erased the white board again for however many times. Yeah.

And began to expand and began to look at some criteria. Talk a little bit about what you began to hone in on as your criteria for a business that you might want to buy.

Mark: [00:09:02] Yeah. You know, the process- part of what I learned in the process, I mean, I was, again, listening to a lot of podcasts about buying businesses, read a couple of books about buying businesses.

And as I learned more about what it takes to finance a business, I realized, okay, I need a business that is going to have assets. I need a business- well, actually assets came a little bit later. I began to realize my primary focus was going to be on a business that , had a certain level of cashflow because having that cashflow is what allows you to finance.

Now, the assets help too, which we learned a little bit later, but the cashflow was really important. And I, so this kind of happened in steps. So from the cashflow that began to narrow down what I looked at. And along the way, as I was looking, I began to think, well, okay, I’ve been in healthcare for 30 years.

So perhaps it makes sense to look at healthcare companies. And we knew some folks, I knew of a guy from C12 we actually knew two couples from C12 who’d owned physical therapy companies. We knew some friends, some kids of friends, who had owned a physical therapy company. And we thought, well, that was a, something to look at.

And there were two or three that popped up. So I I started looking at one of those.

Kathy: [00:10:41] Oh that’s right. It’s funny how quickly you forget. And I’m glad we’re recording this because that was like one of the later iterations and I’d already forgotten about the physical therapy practice.

Mark: [00:10:51] Yeah. Yeah. We looked at a practice down in Denver and talked,

I talked with a woman that owned it and you know, so part of what I learned in that segment was that, there are a lot of companies out there, a lot of businesses, where the owner has created jobs for themselves. And that’s what this woman had done with the physical therapy practice. So if I had been a physical therapist and had wanted to buy a practice that I could lead as a physical therapist, it would have probably been, you know, a good way to go. It was not going to work for us because I, I was not looking to buy a job. And so that was one of the pieces that came out of that was the idea of, okay, I’ve got- needs to have a certain level of cashflow. The second thing is I’m looking for a business that either is, or can be, owner managed,

not owner-operated. I just began to see, you know, realizing that. And I began to look at descriptions of businesses that were coming up. How many of them were saying family owned and operated for 30 years? Well, that’s not what was going to be helpful to us.

Kathy: [00:12:15] We didn’t want full-time jobs. We don’t want, I don’t want a full-time job right now.

Mark: [00:12:21] Right. And I wanted something that already had some level of business that I could manage, but not do on a daily basis. So we were, you know, we, we kind of stepped back. Asked ourselves some more questions. And I thought, all right, well, and we had a conversation I think about, okay, so what’s not gone away during this pandemic?

Kathy: [00:12:49] Right, we’re recording this in February of 2021. This process was happening between, I don’t know. When did you start? April? Yeah. April of 2020. So a lot of this was happening during the fall. Vaccines we’re still somewhere on the horizons. So there wasn’t even really light at the end of the tunnel yet. And so we were looking at, yeah

what are businesses that are continuing despite so many things that have shut down? Right. You know, it was like restaurant no a lot of things that, that got ruled out and, you know, physical therapy. I think I had read on there’s a website- is it Coffman call from foundation and foundation? That’s right.

And they had done a survey, came out, I want to say it came out sometime last summer about what are some businesses to consider or professions even, despite the pandemic and physical therapy was one of them because, you know, there’s a good section we are part of it that are getting older and, you know, physical therapy is a big part of recovering from surgery or just maintaining mobility, strength.

Yeah, so that, that had an appeal.

Mark: [00:14:12] It did. The other thing that happened back in the fall is, our gas fireplace downstairs in Granby stopped. And I had been able to reset the one on the main floor, but the one downstairs wasn’t resetting and all that. So I called a local, there in grand County, this little fireplace service company.

And took several days to get a return call. And when I did get the return call, the message was, Hey, thanks for calling- we’re several weeks out on our repair schedule. So if you’d like to call back and get on our list, we’d be happy to.. Well that, so I was a little frustrated with that, but then as we talked about it, we realized, okay, there are a lot of businesses that have actually thrived during this, and I didn’t really want to go into a

turn around. We talked to think last time in the session about the different types of businesses you could buy. I didn’t really want to turn around. I wanted a platform. I wanted something that was stable that had cashflow and that I could grow. And so I started thinking, well, service businesses. I mean, there, we just know from our own experience that it’s so hard to get people to answer phones.

Kathy: [00:15:39] Oh, my goodness. Somebody is honestly trying to make me crazy, because we moved into a brand new house early December. And we have been here two months. And our bedroom still looks like a college dorm room. We got a mattress delivered the day we moved in. That was great. It’s on the floor with no bed frame because it’s been back-ordered three different times.

And I understand, you know, a lot of manufacturing has been impacted by the pandemic. But there are so many other things that I have had to call about and it has required, honestly, there have been so many things where it’s taken like five calls yeah. To just get a call back. And it’s like, Yes. We have heard this from our friends before that, if you just show up, when you say you’re going to show up or just return a phone call, like in 24 hours.

Mark: [00:16:43] Yeah. They’re way ahead of the competition. Yeah.

Kathy: [00:16:47] Okay. So you started looking at service businesses and where did that take you? How did you find those?

Mark: [00:16:54] I just went back to biz buy sell. And revised my search and was looking in Colorado for service businesses. And I think I might’ve included construction in there as well, but

it was focused more on service. And so what began to come up is painting businesses and landscape. I’ve done that- landscape businesses. There was a masonry repair business. That was real interesting, but again, the guy had created a job for himself. Yeah. What else? So I just, Oh, janitorial there, it was kind of interesting.

Some of the janitorial companies that were coming up for sale, like with contracts and things. And so,

Kathy: [00:17:42] and even more so I would think during the pandemic, because I don’t know to what degree businesses are still doing this, but because they’re, they’re finding more and more, it seems that this really is not transmitted through, touch through surfaces, but a lot of businesses were very concerned as they were trying to reopen and hiring these companies that would come in and spray down everything. So I can see that that would be a growing business.

Mark: [00:18:11] There was a company that has a contract with Cdot cleaning restrooms in the rest areas.

And I thought, well, that’s interesting, huh? So I was looking at all of those and I went past a business a couple of times, I remember seeing an equipment rental business and my first thought was, well, I don’t want to, I mean, you’ve just got so much inventory and you have to, you know, it’s, it’s more of a retail kind of a thing that I just didn’t want to do.

Well then as I, at some point going back through the list that showed up, you know, from BizBuySell was I realized that when it said equipment rental, The picture was a picture of porta-potties. And so I started looking at it and started thinking, Oh, this is actually very, very interesting. Yeah. So

Kathy: [00:19:12] it’s a business that actually our middle son, Ryan, had brought up, how long, a couple of years ago?

Mark: [00:19:20] A couple of years ago, Ryan and Amy had said, we need to find a septic pumping business,

Kathy: [00:19:27] but we scoffed

Mark: [00:19:28] you did I kind of went, oh well, that’s interesting, right? . I think Amy had had a client that owned one and just you know, it just, it made really good money and he was buying a really nice house working with Amy.

And so that’s been in the back of our mind. I actually looked at one that went off the market last year, sometime it just disappeared. So I don’t know what happened there, but yeah, we started, we started down the road of looking at this, looking at this porta-potty business.

Kathy: [00:19:58] Yes. Which we can’t name yet. We’re in negotiations at this recording. Yes. But one of the things that we found really interesting along the way, And it’s a concept that- there’s a couple that I, that I interviewed, they own Belay. It’s a virtual assistant company and they also have a business called, it’s a consultancy business called own not run.com and it’s Brian and Shannon Miles.

And the question they ask, a lot of business owners are. Are you planning to sell this? Do you want a business that you will sell or a business that will become, perhaps something you pass down to your kids? It needs to be one of those too. Yes. Because if you’re just building or creating a business to work in, then , you just have a job, right.

You don’t have a company. I mean, you still have a business . But we found as you looked at you know, I don’t know how many things that you would bring to me and say, Hey, I found this, this looks interesting. You dig into it a little bit. And none of them had prepared their business to sell, even though they were trying to sell it at the time.

And what was kind of a little heartbreaking really is, I remember there was a landscape business you looked at where this business, they, up in the mountains, especially like Aspen or something like that. You have second homeowners and people come in the summer and they want these beautiful lush hanging baskets and manicured yard and everything.

So there was a business that did that. And as you looked at the last couple of years of business, that business had dwindled . Making it less valuable. Yes. And we just saw that time and time again is like, Do people not think towards that selling point and make it as valuable as, as you can. I mean, even this business that we’re working with, our son has tried to get

a port-a-potty delivered to his, he has a ranch, he trains horses and they, they don’t go there. It’s only about 20 minutes out of town, but they’ll go an hour South of town. We’re just like, Oh my goodness. I can’t believe. They just would say, well, sorry, we don’t go that direction. Yeah. So again, missed opportunity.

And because of the foundation seems to be there. There seems to be a lot of room for growth.

Mark: [00:22:44] With this business, yes, there’s tremendous room for growth. It’s been interesting getting to know the broker a little bit on this one. He’s been a business broker for, I found out he was a CPA, had a CPA practice in Florida that he sold, moved out West, became a business broker and has been doing that for 26 years here in this area.

He said, what we’ve experienced is the norm, that business owners, even, even if they happen to reach out to a broker fairly early, I mean, you have to start preparing, if you haven’t done it yet, and you started today, preparing your company to sell the minimum would be a year. The bare minimum. And part of it is you’ve got to all the stuff that you try to, you know, push personal stuff into business.

You’ve got to pull that back out and you’ve just got to think about. Am I selling, am I selling something that someone can finance and that someone can grow? And so you can’t burn bridges. You know, you’ve got to, you’ve got to have more than your own personality that’s driving the business, and the masonry guy, you know, that we looked at and I thought, Oh man, what a cool thing to

work on these historic buildings, but it was all based on him. And there was, unless someone came in and worked with him for a year or two, you know, someone who knew masonry, even it just wasn’t gonna work, you know, as a sale. So, yeah, it’s been fascinating and I love their concept, you know, the miles just asking that question and, and if, if you’re going to do either of those two,

it’s it’s mostly the same path, a little bit different if you’re bringing, your kids, and then you’ve got to think through a different set of issues . But you’re still building something that is going to have a longterm value and a longterm pathway.

Kathy: [00:24:55] Yeah. Kind of a, a growth trajectory. Yes. Yeah. So some of the conversations that we had along the way, because just to be clear, Mark really is the entrepreneur.

I would describe myself as entrepreneurially minded. I had my own private practice, but much like the guy that did the masonry. When I closed my practice, you know, it was gone, it was done. I couldn’t sell those clients. I couldn’t sell that business to someone else because my business was based on me.

And when I was gone, it was done. That was a little sad, but I didn’t have these resources ahead of time to think about how to grow it in a way that I could sell it. So as we have these conversations, again, we are we’re 61 and 62, no, 62, 63 -lost a year. And you know, again, we don’t we don’t have the energy we did when we were 30, but mostly we have a lot of things that we enjoy doing when we can get back to them. We want to do some traveling. We’re hoping- Mark loves to bird hunt and our bird dog ellie had a really bad knee injury last fall, and it put her out for the whole season, but she’s getting better.

And hopefully you can do a little hunting, but there are things that we we’ve kind of paid our dues to have some free time to do these things. And, but at the same time, We’re not done contributing to our community, contributing to creating jobs, and building really a legacy for our family. So there were some conversations that we had, one of which was, well, how much time is that going to take?

And is this going to be a full-time job? So that was something that we processed some as different opportunities came up. And it was also a very different process than when you started what was originally AlzCare. We didn’t have much margin at that time. We had three kids that were elementary, middle school and high school.

Yeah. I had a private practice that I had just started. And you had the idea to start this company, a small home like setting for Alzheimer’s patients and y’all, we didn’t even know the questions to answer or to ask. We did not know what’s ahead, which is a lot of the reason why I’m doing this podcast and why I write on the blog, is to help other couples think about things that you don’t know until you’re in the thick of it.

But we just did not have the margin to, to ask a lot of questions. So at this point in life, we have, we have too much time together. And as you would come across an opportunity, you would bring that to me, and we would really process it out loud together, which was a little different experience for us. I liked it.

Mark: [00:28:17] It was different. I mean, I think I’ve always, I don’t know that I would’ve recognized it earlier, but I’ve always been a verbal processor. Although whiteboards are important too, but in the past, as I’ve processed things, and we’ve talked about things then if you just didn’t say no, I assumed it was, yes.

Kathy: [00:28:44] I wish I could think of an example now of something that you move forward with. And I was like, wait, but we didn’t agree. And you said-

Mark: [00:28:51] Bird dogs.

Kathy: [00:28:53] Oh, yeah, bird dog. Oh my goodness. That’s

Mark: [00:28:56] that’s a whole story. Maybe we’ll do a session on that.

Kathy: [00:28:59] Sometime we did an exercise on communication at the very first marriage retreat we did about speaker listener technique, and we were talking, Mark wanted another bird dog.

He wanted a puppy to come alongside the other one he had so that there would always be one at the ready as the other one got older. And the couples that attended that marriage retreat asked us months later. So, so what did you decide? And my answer would be, well, we didn’t decide. And next thing I knew Mark tells me he’s flying to Montana to pick up a puppy.

And I was like, You’re what, at that point I was just defeated. I was like, I give up, I am out numbered and that’s the one that’s been injured recently and she’s very sweet and I love her to death, but unpacking boxes the other day, I came across all the cookbooks that she chewed through. Everything else that she chewed through was in the trash.

But anyway, we digress some of the other. Yeah. So you processed out loud. We had conversations about, well, what can we afford to spend? And timing was pretty critical because we were trying to get to closing on this house. And that was a real challenge this time. Yeah. Again, thank you, Corona virus.

Lenders we’re looking at, at making loans very differently,

Mark: [00:30:29] especially for self-employed people and yeah. And the, so we did have a number of , conversations, which we didn’t have the first time I started with AlzCare about how are we going to do this financially? What this what’s this going to look like?

. And so we’ve, we’ve learned a lot over time about how to walk through those kinds of decision-making scenarios and then decide, you know, where’s the money coming from? How are we going to do it? What’s it going to be structured like, and the timing on this was just really good. I mean, when this one came up and we started looking, we had closed on our house here and we were able to just walk through, we were able to find a couple of independent banks, which we’ll talk about probably next time.

Yeah. But all the timing just kind of came together for this, and you and I were I think we were, we were definitely on the same path. Don’t you feel like? And getting to there? We may have been.

Kathy: [00:31:37] Yeah. I think what’s different for me is while I’m supportive of it, and I think I asked good questions. I understand business way more than I did 20 whatever years ago when you started this company.

But I think the other thing that’s different is I’m much more clear about my strengths and my energy level and my interests. And whereas, there was a time early in AlzCare that we were stretched so thin financially, the company was, and we were personally, like, I remember one of the buildings one of the care homes.

The bushes were getting kind of overgrown and I commented what’s happened, you know, do we not have somebody that’s trimming? And you’re like, we can’t afford it. So I got out there one day with, you know, big sheers up over my head, trimming this Bush. And I’m like, well, I, you know, I have time and I can do it.

So I got out there and did it. I’m just, I’m kind of an action person. If there’s something that needs to be done, I’ll just, I’ll just do it. And I did something to my rotator cuff and it was months getting that back into proper working order. Yeah. And I remember that, I think I was working with an, a Rosti doctor and he said, yeah, it’s really not good to, you know, do this repetitive motion over your head.

I was like, yeah, lesson learned. But I think in those earlier days, when money was really tight, I was trying to find ways to alleviate your stress because you tended to bottle things up and keep it inside. And I knew you were stressed. And I was like, what can I do? I mean, I was working full too. I was providing health insurance through my work and raising kids and yes, as I said, we didn’t have much margin, but I was, I always felt like I should

be helping, so wrestled with a lot of guilt wrestled with a lot of fatigue, because I’ve really just overextended. And as I’ve gotten healthier, I would say over the years and really learned more about how to support you without losing me. Yeah. That feels real freeing. And so it feels very nice to come in as partners.

Yeah. In that we talk everything through, I can ask questions, you’re not on the defensive. Yeah. You hear it as a good question. And, but I don’t feel the need to try to figure out where I fit into this business . And, and at the same time I have felt very supported by you for instance, in this podcast project.

And just letting that be my focus and that’s, that’s what brings me joy right now. And as we talked about that, because I if you guys remember from the first episode, part of what prompted, this was how the pandemic had impacted our health care business. And because I feel like I, I have a master’s degree,

I have a good mind and I, I should be able to contribute money to our household. And I, I was feeling guilty that all this pressure was on you, but you came back one day and you clarified that and it was really helpful. Do you remember what you said about joy?

Mark: [00:35:20] Yeah, for me working. And creating and building a business is life-giving, it brings me joy to be doing this. Yeah. And so I. I have no expectation whatsoever or desire. I’m, I’m excited that you’re doing what you’re doing with the podcast and with your writing. And yeah, it’s interesting how we’ve both kind of had the freedom now for you to pursue those things, and for me to actually pursue more work, which sounds weird, but it actually is life giving to me.

Kathy: [00:35:58] Yeah. Yeah. That was huge for me to hear that from you, it felt like a release, like, okay, I, I need to not feel guilty about this anymore. You have released me and I, you know, we’ve been married long enough that I know you’re not just you’re not saying that to make me feel better. Right, right. So I appreciate that.

All right. Well, I think we will wrap up this episode here. The next episode, we’re going to talk about dating and engagement. We’re kind of carrying in this marriage theme. If you hadn’t noticed, we’re trying to apply that to the business, but we will pick up next time. So if you enjoy this, please subscribe and share an episode with a friend.

All of this helps the podcast to get found. So I do, I hope you’ll think of somebody maybe that, you know, that could. Benefit from these ideas. And if you have any questions about buying a business, feel free to shoot me an email. You can go to my website, Kathy rushing.com. My email is info@kathyrushing.com.

If it’s a question that Mark needs to answer, I’ll make sure that he gets it, but we would love to hear from you and know if this is helpful. If anybody else out there is buying a business. And we’d love to be a resource for you. So you’re building a life together. Make it a great one CNX time. . .