The role of marketing in preparing a company for valuation / exit [Kylon Gienger]

Join Andrei and our guest on today’s episode, Kylon Gienger, as they will be discussing the role great marketing plays in preparing the company for evaluation or/and exit. Kylon is a serial entrepreneur, podcast host and president of Acquira. Kylon’s mission is to build and lead something monumental that increases the quality of life of millions of people. 

𝐂𝐨𝐧𝐧𝐞𝐜𝐭 𝐰𝐢𝐭𝐡 ​​𝐊𝐲𝐥𝐨𝐧 : 

𝑊𝑒𝑏𝑠𝑖𝑡𝑒:  https://acquira.com/

𝐾𝑦𝑙𝑜𝑛 𝑜𝑛 𝐿𝑖𝑛𝑘𝑒𝑑𝐼𝑛: https://www.linkedin.com/in/kylongienger/ 

 

𝐂𝐨𝐧𝐧𝐞𝐜𝐭 𝐰𝐢𝐭𝐡 𝐀𝐧𝐝𝐫𝐞𝐢:

𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑢: https://marketiu.com  / https://marketiu.ro   

𝐴𝑛𝑑𝑟𝑒𝑖 𝑜𝑛 𝐿𝑖𝑛𝑘𝑒𝑑𝑖𝑛: https://www.linkedin.com/in/andreitiu/   

𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑢 𝑜𝑛 𝐿𝑖𝑛𝑘𝑒𝑑𝑖𝑛: https://www.linkedin.com/company/marketiu   

𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑢 𝑜𝑛 𝑇𝑤𝑖𝑡𝑡𝑒𝑟: https://twitter.com/marketiuagency   

𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑢 𝑜𝑛 𝐼𝑛𝑠𝑡𝑎𝑔𝑟𝑎𝑚: https://www.instagram.com/marketiuagency/  

𝐸𝑚𝑎𝑖𝑙 𝑎𝑡 hello@marketiu.ro

 

𝐋𝐢𝐬𝐭𝐞𝐧 𝐭𝐨 𝐭𝐡𝐞 𝐞𝐩𝐢𝐬𝐨𝐝𝐞 𝐨𝐧 𝐲𝐨𝐮𝐫 𝐟𝐚𝐯𝐨𝐮𝐫𝐢𝐭𝐞 𝐩𝐥𝐚𝐭𝐟𝐨𝐫𝐦:

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Episode transcript:

 

Andrei Tiu  

Hi there, this is Andrei and you are on The Marketing Innovation Podcast Show. Our special guest today is Kylon Gienger, serial entrepreneur, podcast host and president of Acquira. Today we'll discuss the role great marketing plays in preparing the company for evaluation or/and exit. So without further ado, Kylon, and it's a pleasure to have you here on the show. How are you? How's your morning going? Let's crack on.

 

Kylon Gienger  

Thanks for having me, Andrei. I'm doing good. It's early here. I'm located in Montana, USA. It's very cold outside. We're starting to get some snow woke up early for this. And I'm stoked, man. Let's do it.

 

Andrei Tiu  

Appreciate it. Appreciate it. Did you have your coffee, yet?

 

Kylon Gienger  

Uh, no. I'm drinking decaf these days. Because we're trying to get away from caffeine for a month or two. See how it goes on a week, two weeks into that. And so so far, so good. Okay, decaf coffee is kind of the Saviour there.

 

Andrei Tiu  

Well, you know what they say the first week or two are the hardest right to cut down on caffeine that you shouldn't be?

 

Kylon Gienger  

Yeah, fortunately, it wasn't that I think it's worse for some people than I had maybe a couple of nights where I kind of woke up with a headache. Besides that, no massive effects. But it feels good to have the self-discipline to be of something you've been on for years for some time that I'm 100% going back, altering caffeine again.

 

Andrei Tiu  

Cool, cool. Okay, so interesting stuff, interesting times, we have a very interesting subject today, as well. And I'm really looking forward to the stories because I know you have quite a few that will go through. I think just for people so you know because we do this in the audio and video format as well. And some people research more than others, I think let's just make it easy for everybody tuning in today, to let them know a bit of your background, who are you really and what you do. And then we can go into subjects and discuss strategies and all that jazz.

 

Kylon Gienger  

Let's do it, man. To me, I'm a jack of all trades, master of a few. I've done a lot of things in the last - I'm 32 years old - I've done a lot of things in the last little over a decade, I was in the military, I got out of the Navy in 2012 and promptly started a residential commercial painting company with a really good friend of mine. The first business I ever started, just wanted to cut my teeth, didn't want to work for anybody else and thought, hey, we'll try this thing. So I gave him 1000 bucks, we bought a van, we started hitting the road knocking on doors trying to paint houses that quickly grew to we had operations in six different states and learn how to hire and manage employees and also not manage employees, there's plenty of mistakes there almost went bankrupt at one point. Through the course of building that business built a couple of other brick and mortar retail businesses got into the house flipping game, I started a podcast called 'Successful drop out' that you know, grew quite popular, learned a bunch of different marketing stuff there, you know how to kind of niche down be a big fish in a little pond and stuff like that. That worked pretty well for me. That eventually transitioned to be working with one of the first guests I had on that podcast, who bought businesses. And that led to eventually over the next three, four years to acquire, I learned a lot about buying businesses, instead of starting from scratch as I have been, and how to identify great businesses and businesses that had great marketing or a lack of marketing that we knew we could add a lot of value to, post-acquisition. And that leads me to where I'm at today. Now I work with Acquira as part of the founding team there. And in a nutshell, we help people buy businesses instead of starting them. So I mentioned house flipping before, I imagine a lot of your listeners are probably familiar with the concept of house flipping, you buy something, you fix it up, you turn around and sell for more than you paid for it or you hold on to it, let it cash flow. We're talking about the same thing here when it comes to business buying just with businesses, which is a little bit more complex all around. But is, especially here in the US, a fast-growing interest among the entrepreneurial community we call the people we work with acquisition entrepreneurs, as opposed to startup entrepreneurs, which everybody's kind of familiar with. So that is me and what I do any kind of background in a nutshell there.

 

Andrei Tiu  

Nice. Cool. So how'd you get into acquiring and how did you change your perspective from starting businesses and growing them, you know, the way that you have done before, versus you know, figuring out there is an opportunity there to first of all to search for businesses that will be good to buy opportunities. And a question here is: How do you find them? And then of course, how to develop a business around that and to leverage your opportunity.

 

Kylon Gienger  

So how do you find you're going? How do you how do we kind of find these businesses to buy? Or how do people discover business buying?

 

Andrei Tiu  

Let's start with: What made you discover this opportunity, you know, like, make the switch from funding the business and growing it to getting something that is already set up?

 

Kylon Gienger  

Yeah, good question. I mean, again, the very first guest I ever had on the first podcast, I started business, right, I remember I was so nervous, I'd never interviewed anybody before I chugged a glass of wine beforehand, we had a fantastic conversation and hit it off. And it was a year and a half later, or something, he connected with me and said, Hey, come join me in what I'm doing. I'm buying these at that point, we were buying online businesses, content, websites, e-commerce, SAS, stuff like that. And I quickly realised, Hey, I've been doing this business, starting a business from the scratch game for a while. And here, I can find really great depth, leverage and ways to buy these companies and step right into an existing customer base cash flow, and the returns are much greater and come much faster than if I'm starting something from scratch. I don't have to spend the first two, three years blood, sweat and tears trying to build a customer base from scratch, build a product from scratch and prove the market raise funding. It feels like ethical cheating, you know, in a way, you're sort of cutting in line in the process of owning a profitable business and being working for yourself, right being kind of the master of your own destiny there. So, and a lot of people I think are discovering the same thing here. Particularly in the US, we have an entire generation that we call baby boomers that are reaching retirement age. It's millions of people here in the US. And the majority of small businesses here in the US are owned by this age group. And they're quite literally the backbone of the economy. And we're talking everything from online, SAS companies that were started a decade or two ago to really boring brick and mortar businesses like bat companies, plumbing companies, roofing companies, these are all owned by folks that are reaching retirement age. So quite literally, we have trillions of dollars worth of small business assets that over the next decade are needing to switch hands, or they will cease to exist, they'll just be shut down, they'll die. And they employ millions and millions of people, like I said, the backbone of the economy. So we have a lot of supply over the next decade-plus coming down the pipeline here. And one thing that Acquira is trying to do is raise a lot of awareness that, Hey, you want to own your own business, think about buying one stuff, starting one. And when we started out, definitely big fish in a smaller pond. Not a lot of people had heard about it. But these days, people are starting to catch on to this idea of acquisition entrepreneurship, and that's what we exist to. But oftentimes they don't have the capital, or the knowledge or skill set to tackle buying a seven-figure business by themselves. And that's where we come in.

 

Andrei Tiu  

I see. Okay, so discovered this market through your first podcast guests. And then when business, what are you exactly doing with Acquira right now. So just for everybody to know exactly how you come into the process of, you know, a business wanting to be invested into or sold to either a private investor or company. How do you guys work with, in this case, small to medium-sized businesses?

 

Kylon Gienger  

So at its core, I would say Acquira is an investment fund and an accelerator for business buyers. So if anybody listening is familiar with the concept of the company Y Combinator, they're an accelerator for startups and startup entrepreneurs, you get into their programme with an idea, they help you prove that idea. They fund you the launching pad for starting your startup, right? We're very much the same thing. But we're a launching pad and an investment fund for buying your first business. And how we help is we're training, we're very good at training. We're also very good at digital marketing, which means we can get a hold of a lot of people that are wanting to sell their business and also attract a lot of people that want to buy these businesses, aka you know me on this podcast is one, one way of attracting people through our funnel to help them buy a business right. We're also very good at trading. So we bought a lot of businesses ourselves. We understand on a deep level every part of the process of buying a business which broadly speaking is first you got to know what you're looking for. We call it your investment thesis. There's a lot of different businesses out there are a lot of different industries. Each business no business is the same every business is absolutely unique. To me, it's like getting to know a new person when I approach buying a new business. Each business has a personality that got to kind of dig in. There's a lot of different facets and nuances to understand there. So define what you're looking for. So you can kind of sort through the mess and qualify and disqualify fast, you know, the next step is to actually then find the business to buy sourcing. Where do you look? Who do you talk to? After you find a business that's intriguing,  how do you know it's actually a good business to buy, and it's not going to bite you in the ass after you put $100,000 on the line? So there's diligence there to think about. There's a legal aspect to it, there's a very, very heavy people aspect to it. After all, all the businesses at the end of the day, it's a collection of people working towards a kind of a common goal and rowing in the same direction working in unison. So you're talking to sellers, you're talking to brokers, you're talking to lawyers, there's financing, not everybody has, that the types of businesses we buy, they're larger, the smallest business we buy might be worth 1.5 million. Nobody has just 1.5 million sitting in a bank account. Well, some people do, but very few people do. Especially if they're smart with their money. They've got it. So how do you find the money to buy these businesses and leverage them right? And kind of have that capital stack correct? So and then anybody can buy a business? But once you buy one, how do you then operate it? How do you optimise operations so it runs smoothly? And then how do you grow it? Right? And how do you think about marketing and a lot of businesses we buy, have almost zero marketing. So these are all things we know very well, we have the training, we have vendors around them, you know, we have legal, legal folks diligence folks that we connect with, we've got well-packaged training that kind of outlines every step of the process. So that's where we come to help folks that are looking for businesses. On the flip side, we do have marketing funnels and landing pages, stuff like that, for folks that are looking to sell their business. But we're experienced in helping coach those folks on how to prepare their business for sale. But for the most part, we're very focused on the buyers, as far as if we're talking marketing, how our funnel is built, and our business works.

 

Andrei Tiu  

Okay. So here, I see, we have two categories of stakeholders or stakeholder groups, if you want, that I know our listeners would be falling within. So that one would be the entrepreneur - potentially the investor, in this case, that would potentially want to acquire a new business, and then the Marketing Pro, which will be the person that is responsible for the marketing department. And now in a way what you do as well, to ensure that the company has a sustainable approach to this sector, and you know, just helping the company grow for marketing. Since this would be more of what we have discussed. So far, I think, not not the last one. But the first thing which will be, you know, acquiring companies and this stuff. Let's focus a bit more on this so we can get to some actionable insights. And to build a context around the bit further. This is also very interesting, you know, just from a curiosity point of view, I think this is a very fruitful conversation. And the question that I have here, personally, but I think it's relevant to many is how do you find businesses to purchase? Or where are these folks that want to sell their businesses? How do you guys go about it?

 

Kylon Gienger  

So again, I'm going to be really talking from the perspective of somebody either based in the US looking to buy a business or looking to buy a business in the US, because that's where the majority of our experience is, and it's interesting, I don't quite understand the business buying scene in the rest of the world. I just haven't a lot of focus on looking in on it. But I know for a fact that in the United States, there is a unique large supply of these businesses to buy. And a lot of that has to do with this generation of baby boomers retiring, right. So if you're looking for business in the US, right, in terms of sourcing these deals, there are two routes you can go broadly speaking. There's on market sourcing. So through brokers, people, you know, third parties that have lifted these businesses and there's off-market sourcing, which is you connecting directly with business owners and asking them: would you like to sell your business? Figuring all that out yourself. We focus a lot on both. We have a lot of experience with both in terms of on market sourcing. There's a lot of business brokers out there. Since business buying is a new space. The business broker space is not well consolidated or standardised. They're just small Business Brokers are some large firms and stuff, for the most part, a lot of small, small firms are dotted everywhere, each has their own approach to finding and listing these businesses for you the prospective buyer to look at doing diligence, stuff like that. Not all are created equal. Some are great, some are bad. A lot of the businesses they list are found through a website called bizbuysell.com, which if folks are familiar with zillow.com, and what that is too real estate bizbuysell.com is for businesses for sale. So you can go to bizbuysell.com right now and see hundreds and hundreds, 1000s of businesses for sale, all different types, right. And most of these are listed through brokers. Brokers are incentivized by getting their fees at the end of the day. So they'll do a certain amount of diligence. They'll have prospectuses basically large PDFs they put together on here's what this business is earning and the risks and the opportunities for growth. Take all that with a grain of salt, you need to do your own diligence, right? Off-market deals, this is a little bit trickier. And we can coach people through this but if you like cold calling, this is essentially where you're calling up or hiring somebody to call up businesses and ask them Hey, do you want to sell your business? and the benefit there is you're not going through a broker you can connect directly with the seller, you can often even negotiate a better deal get a little bit more creative, stuff like that. But the con, the downside is you're doing a lot of education and you have to be good with people. But often sellers think their business is worth 10 times revenue, a right which in reality, it's maybe worth three to four times their seller discretionary earnings, SDE we call it or what they're actually taking home. Or, you know, another close proxy is like the net profit of the business. So there's a lot of education there. Oftentimes, these small businesses, could be multimillion-dollar businesses earning a couple of million dollars a year, but highly, highly disorganised and under optimised, you know, zero technology in the business, no marketing, finance is done on the back of a napkin. So having to sort through all of that and understand it is a chore by itself. So those are kind of the two approaches. And we can help coach people through that. And you want to do, again, there are some boxes you want to tick when you're first looking at these businesses. You don't want to buy or engage with a business or spend too much time looking at a business that has some very large red or black flags, we call them which are deal-killers, things that just make it extremely unattractive. And it's just going to bite you in the butt after you buy it, right.

 

Andrei Tiu  

So you mentioned there, the way that you look at valuating a business and I think I'm very aware that this is a very broad spectre of, you know, like, what things should you take into consideration when you try to put a value on your business, there are a number of ways I can beat that and what you mentioned there as well with, uh, you know, actual earnings that you take home, so the net profits and multipliers, but would you have some examples of certain business that was coming up for sale and the way that you were thinking of its valuation, in terms of things that you were considering. And, you know, maybe numbers as well, when it came to revenue versus profits and number of people in the team, accreditations and certifications, stuff like that.

 

Kylon Gienger  

Yeah, valuation is always a very nuanced subject. It's an art and a science, right? At the end of the day, the business businesses value is what the seller agrees to sell it for, and the buyer agrees to buy it for. Right. But having said that, I will say the majority of the types of businesses we target just to give folks some quick context, we generally they're doing over 500k per year. And this means they have anywhere from, you know, eight to could be 25, 30 employees, 60 employees, if they're doing more like one to 2 million in EBIT the per year, and you know, 10 to 15 million in revenue. The industries that we operate a lot in these days is home services. And I can go into why that is but things like plumbing companies back up, I bought an a plumbing company here in Montana. That's why I'm here, back in because almost six months ago now - roofing companies, the sort of steady stable businesses that are really recession proof, urgent, active problems that customers need, and while we seem to pay for it, the plumbing in your house is your most used utility probably and people take it for granted. But if your toilets broken or your your faucets not working or a pipe is leaking in your house, you will call somebody out there to fix it and you will pay that person to fix it. Even if you have a vacation coming up or other discretionary spending you want you have to get that that urgent act of problem fix. So that's why we like these businesses. More often than not when it comes to valuation. We're buying those businesses at between two and a half to five multiple of that yearly EBITDA. So it's earning a million dollars a year, you're probably buying it for somewhere in the neighbourhood of three $4 million. Right? If it's earning the owner about a million dollars a year. Now, there's all sorts of factors that go into that. How risky is the business or how turnkey is the business is it running really well does have a lot of systems in place, good marketing, is it on a growth trajectory, then it's going to be valued at probably a little bit higher on that multiple scale. If it's a, if it's a little bit risky, it could be valued a little bit lower. Or there's a there are ways it still could be valued higher, but maybe you're looking for ways to mitigate some of that risk directly into the deal structure. So for example, we've had some deals where they have some large customer concentration, right, and this is part of our diligence process, one thing we want to look for is, Where's all this revenue coming from, if more than 30% of revenue is coming from a single customer, that's a red flag, potentially a black flag,  because you have a large single point of failure, that customer goes away, that relationship goes away, the business is cut by 30%, all of a sudden, so something like that makes us a little bit nervous, you could argue that values the business a little bit lower, but the seller might not think so. So maybe another approach. And this is again, where the art of nuance comes in, would be to mitigate that risk straight into the deal structure through what we call earnouts, which is you just take a portion of the purchase price, if you're buying that business for a million dollars, say to mitigate that rescue say but I'll pay you 200,000 of that in a year after we buy it assuming the business continues hitting these certain benchmarks, right. And so that and if it doesn't, because maybe these risk factors are activated and business tanks a bit you don't get that out. So that's some ways to think about it again, a subject we could discuss at length for a very long time and every deal is different as part of you know, the art of the deal, right? The art of negotiation. But that's some quick context for folks. Not saying that you know, two to kind of four or five, multiple of EBITDA is pretty common for businesses earning 500k to 2 million in EBITDA per year, and here in the US right now.

 

Andrei Tiu  

So that would be total profits, the stakeholder’s salaries plus dividends, just for the people that don't know what EBITDA is.

 

Kylon Gienger  

Correct. There's, there's a thing called add-backs, right like that owner, often they could pay, they could pay themselves inflated salaries, maybe they're paying himself a 200k salary per year, right. And so that's taken away from the EBITDA on their books, but when they're going to sell it, they may add back and they brought probably rightfully so they would add back 100,000 of that salary back to the profit of their company. Because a new owner, if you're gonna step in and hire a general manager or something, you probably won't need to pay him 200k if you put maybe 100 - 120k per year. So there are even ways in which when these sellers go to sell their business, they are adding back certain expenses that a new owner would not have to incur moving forward, which inflates that EBITDA as well. And you do have to watch those. As somebody's stepping into the business, not every expense they're trying to add back is justified, it might be actually a necessary expense moving forward like I've seen sellers try to add back. And I'm kind of going off a tangent here. But hopefully, it's helpful. I've seen sellers try to add back certain random bonuses and holiday bonuses and stuff that they give to employees, they try to add that back to the profit of their business to get a higher valuation saying that the new owner won't have to do that it's not necessary to operate the business stuff like that, I would argue against that, right? If the employees are expecting that every year if it's part of the culture part of them staying happy, that's certainly part of operations moving forward. So we're not going to add that back and your business will stay at a slightly lower valuation maybe so there's a lot of stuff to this right. And that's a lot of what we do at Acquira, you're doing the work right this is your deal in our ecosystem, you are taking the action pursuing this thing, but we're there alongside you as sort of your Sherpa up this mountain, you know, of what it takes to acquire a business and we can help you navigate all those complexities.

 

Andrei Tiu  

Okay, super, this was very insightful. And now let's try to move a bit into the other stakeholder group which will be the marketers. So, there is a certain variation that can happen in terms of the way that the company is being valued, depending on a number of metrics, but marketing and the sustainability of their inbound leads funnel and so on. So the appearance albeit being on a growth trajectory from a marketing standpoint, and their ability to bring in leads that can potentially translate into sales so that they can grow their customer base is certainly one. So, from your experience so far, what are some marketing areas or things that have influenced positively the valuation of a company? And further, what can marketers do to help their company get better valued or be more sustainable from that front?

 

Kylon Gienger  

Yeah, so if you own a business, and you wanted to make it more valuable from the standpoint of marketing, and again, the best context I have is in these home services, brick and mortar businesses where buying and marketing might look a little bit different there as opposed to marketing on a blog, or E-commerce or any kind of digital property right. In here, a lot of that comes from, you know, we've got PPC, we've got SEO, these businesses get a lot of business, just word of mouth by just existing in the local community for, you know, two, three decades. Reviews, customer reviews are massive, when it comes to these businesses, Yelp, Google My Business, Angie's List, are all platforms.  There's a lot of room for optimization there that a lot of folks don't typically focus on- conversion rate optimization on those platforms on your website, you know, having your number right there, at the top, you have calls to action there. A lot of these businesses have websites that go back to the early 2000s. Right. So typically, we're seeing if somebody owns one of these types of businesses, there's always a lot of room for growth and marketing. So if you're a business owner, getting those things shored up first is pretty key, like practice, good SEO be pushing out, you know, at least a couple, you know, good, targeted articles of a month PPC, conversion rate optimization on your website. The thing that immediately comes to mind, though, for a lot of these businesses is with more marketing comes more growth, which means your operations have to change. And that's where we see a breakdown a lot of the time. A lot of the folks that we're buying businesses from don't want the growth that comes along with the marketing because it essentially means that they need to hire and train more people. And as they hire and train more people to do business to handle the growth of the business, they need better and better systems, and they need to run that business and build it like a well-oiled machine. And a lot of people just don't know how to do that. Or because of their age, they're just done there, let the business just sort of hum along and they're willing to sell it for whatever it's worth and go and retire. So that's the other thing to think about. I'd say when it comes to these businesses, we just don't see a lot of great marketing practices. Like I'm currently negotiating with a deal. That is it's a $6 million deal. These folks, they do 14 million a year, they spend 10 - $15,000 a year maybe on their advertising and marketing, their website is from 2002 all their businesses are relational and comes from word of mouth. Now one of the first things I'm going to do and I step in there is work on that marketing. But even that will take some time. And I have to sort of building the operational base up to the point where we can handle the additional business because right now they just don't need it. So I don't feel like that answer was as straightforward as it could have been. Because, again, a lot of the businesses we talked to just don't focus on it.

 

Andrei Tiu  

No worries. It was a very good context building insight. And maybe the question, the question could be put in another way. Do you have situations where you were negotiating a business and you were looking at this marketing department activity, and you were looking at other assets, saying, you know, I know you that if they had, I don't like x social media follower base, or if there were ranking through SEO on top positions for these and XYZ, you know, things that you know, marketing-wise, would be valuable for the business, I would be able to value them at, let's say five, the multiple of five but because they don't have them, I'm able to get their valuation down and to get this business for less, let's say 3.5 or something like that? Knowing that if you apply a certain recipe of success through marketing, then you'd be able to increase the valuation of that business a lot within a short period of time.

 

Kylon Gienger  

Yeah, 100%. Like, look, if you're a business owner, and you're focusing on those things, your social media, you got to be a great PPC campaign out there with proven results and low customer acquisition costs. And you've got SEO humming along. And you're ranking organically for, you know, if somebody types in again, you know, situation: plumber, Missoula, Montana, right, and you're ranking up there on top. That that speaks volumes. And at that point, it's like I was saying earlier, you have a lot much more turnkey business. So the buyer is not going to want to value us more, but you as the seller can certainly have an argument for being valued more, right. This, but again, me as the buyer, I'm also thinking like, it's great you could have, because actually this business that I bought, they were focusing and investing pretty heavily in SEO and PPC about a year ago. But it was basically a waste of money, they were doing a good job at it. But the actual business wasn't set up to serve all the new customers that were calling the phones. Right. So it was they were literally just throwing dollars away, and just marketing to the market. But the business and the operations were just not set up to handle the customers, the extra customers coming in. So as a buyer, that's also something I'm looking at. So you're great at marketing, great. Are you actually taking advantage of those leads you're getting and serving those customers? And is your business set up and your team set up and systems are they optimised to serve those folks so that business can grow as the marketing does? So I'm looking at that too. And those things just need to go hand in hand together. And that's more often the case with again, businesses we're experienced in which are brick and mortar, physical businesses. With online businesses, it can be a little bit different story, if you're selling digital products, right, you don't need a massive operations team to bring in a lot of new customers and make money.

 

Andrei Tiu  

Okay, cool. Yeah, this is interesting. So basically, to sort of getting into an actionable point or a conclusion for, you know, the marketing leader that is out here looking or listening to the podcast would be, certainly make sure that you know, the targets when it comes to marketing to fulfil the capacity of your business right now. So you know, your numbers, and you're able to get there for a scalable model of maybe lead generation or you tackle the SEO bit so that when, let's say operations changed, and maybe you get new colleagues or the management changes a bit, you as a marketer would be able to bring in leads to fulfil the need for those new clients so that you can fill up the roles. And then for the entrepreneurs/business owner, if you're looking at selling your business, certainly make sure that you know, you have your operations in place and everything clear. And also you can I mean, you can use marketing to ask for a higher price or valuation. Because you know, you can use that to your benefit, right? 

 

Kylon Gienger  

Yep, that's exactly it. Yeah, well said

 

Andrei Tiu  

Super. Okay. So I know you have a mental model, you've implemented into your life. Tell us about this mental model and how it's impacting you and the business.

 

Kylon Gienger  

I've got a few I could probably, I could probably go through if you want. I like mental models a lot. Think about them a lot. There's several, you know, there's the kind of 80/20 mental model. For Pareto Principle, right? That 20% of the work you're doing typically gets you 80% of the results or at it's the other way around, like 80% of the results you get can kind of be traced back to 20% of the work you're doing. So that's one in a nutshell. When it comes to creativity, you know, as an entrepreneur, you're always needing to bethink creatively, right? And often people think that to be creative, you need to have no constraints, the world's your oyster, you can kind of think of do build, create anything you want. I like to put in place creative constraints as sort of a mental model mental hack to create a trigger to creativity. So for example, don't just say I want to start a business, right, that's too broad and you'll be slow to make progress. Instead, give yourself several constraints. Like I want to start a business but it should only cost me $1,000, my timeline is three months. And in three months, it should be earning me, you know, 3000 per month and only take me three days per week of my time. And the business, the product needs to start with a P or something. These types of creative constraints will actually help you be a lot more efficient in coming up with a creative solution than if you have zero constraints so that's certainly another one. There's another concept I like to use I think it's helpful for marketers as well when you're testing new things - it's a concept from Jim Collins, if you've ever read any of his books would be great, Built to last, Fall of Giants, I'd highly recommend those but because the bullets and cannibals basically and it's sort of like the concept of minimum viable product as well. But if you have an endeavour or something you're wanting to test, right, he says fire bullets first, right and these are low risk, low-cost actions basically to take to test your theory. And once you start hitting the mark with those, you can then fire cannonballs, which are the higher risk, higher cost things to actually make this a reality. So I find myself constantly using that as well. So those are a few that are kind of up in my head that I use on an almost daily basis.

 

Andrei Tiu  

Nice. And also going to so we are now stepping away a bit from this very numbers-oriented discussions, you know, on business valuation and marketing and the first part of our conversation and going a bit softer now into you know, the sort of the mental models that you have discussed, which I very much agree to, I think that they are always great to take into consideration in your day to day life, you guys listening to as well, because this can very much ease your job, or guard you against investing heavily into stuff that you're not very sure is gonna work. Kylon, I know, you are looking at the company culture a lot. And one question that I had for our discussion today was how do you understand the company culture? And what are the ways in which you can establish and control a healthy work environment, from your experience with different companies that you have been working with so far?

 

Kylon Gienger  

Yeah, I like this subject a lot - the subject of culture. And it's certainly part of the art part of due diligence, when you're looking at a business, one of the scariest things in terms of buying a business is stepping into a business with an unhealthy culture. Because that can actually be it's just a bunch of people problems that can actually be very hard to fix. Without, you know, getting the right the wrong people off the bus and getting the right people on the bus, which is firing and hiring people. And that just takes time to retrain people. It's kind of a nightmare to get into a business that has a really, really unhealthy culture. So there's definitely in the diligence process. There are queues that we look for. One of the first things you can do, for example, is looking at customer reviews. Often customer reviews of the business will tell you a lot about the business's culture, In some reviews, you'll notice or mention certain people or positions in the company that are performing or treating the customer badly. That's always an indicator getting to know the owner of the business is also a big one as well because they're often an extension of whatever that that culture is. But in terms of the there's actually there's a great book out there called - I don't recall the author- but it's called 'The culture code'. If anybody wants to learn more about culture, and actually break down the science of it, I would really recommend that book this author, he interviews and studies, some of the most well known and healthy cultures out in the world, that is they're very productive, including Navy SEALs, the kind of Pixar and Disney creative teams and he, he breaks down what makes these cultures so successful, and the science of it and a few takeaways from there that I've always remembered and apply to the businesses I buy, in terms of building that culture is, first of all, it's under, it's helpful to understand just at its root, the word culture in Latin, it's a verb and it actually means to care. 

 

If you break down what a healthy culture is, right, it breaks down into a kind of three components. There's safety, vulnerability, and hype high purpose. So in terms of safety, a good culture is a place where people feel like they can belong, right? And he talks about these things called belonging cues- a pat on the back or gets a slap on the shoulder or, you know, a fist bump. These environments where you're safe here like this is family, you belong here. There's vulnerability, which is, in a company, oftentimes, it's just being honest about performance, it's the ability to sit down and talk very transparently about what's going right. But also what's going wrong, and how can we fix it, let's talk about our mistakes without attacking each other as people, but let's attack our poor performance in the systems behind that and look at fixing that. So, you know, he talks about Navy SEALs, they have, after-action reports they go out into they do training missions, or they do actual missions. And afterwards, they have after-action reports, which is where they critically break down everything that went right and everything that went wrong, and how that's gonna change what they do moving forward. And I do that now with our technicians out in the field, you know, every week, we have meetings, and we talk what's going right, what's going wrong, what's confused, don't have really transparent discussions about that. And everybody knows they're free to make mistakes, to admit mistakes to work through what went wrong. As long as we can learn from that, there's no judgement, right? And then there's high purpose. People have to live for something bigger than themselves. Everybody's looking for that at a fundamental level, I think including the employees of your business right there. You know, a business you could argue, it's there to make money to serve people or whatever, but what's the higher purpose you can draw out from that business, that's really going to get everybody on board? You know, for us with plumbing company here in Missoula, Montana. I told these guys day one, I said, I want to make this company the most highly sought after plumbing company in the city, I want to be actually one of the most expensive because we're the best, and people know what they're paying for. And I want our technicians to be some of the highest-paid and have some of the highest quality of life, as opposed to all the other plumbing companies in town. And so they're starting to cast this vision. And then we talk a lot about serving the folks in our communities, these guys are like, again, I call them the Navy Seals of plumbers in the area I call them the kind of the firefighters of plumbers in the area. They're coming into folks homes, much like a firefighter, they're having an emergency their basements flooding or something, they don't know what to do, they understand how their plumbing system works. And these guys are coming in fixing it kind of saving the day. So it's turning what's kind of an ordinary boring job into something with a higher purpose that gets them excited and gives them a bit of a vision. So that's another really strong component. And how do you tell that story over and over again, in your marketing, in your internal meetings, in your business systems? So that's sort of a bit of a breakdown on how I think about culture and 'The culture code' is a great book to read.

 

Andrei Tiu  

So birth, thanks for sharing. Sweet. So now as we are preparing to wrap up, I had a number of another couple of questions, specifically to do with your approach to marketing with Acquira and you know your plans for 2022. If you'd like me to share a bit on what you guys are looking for, at the moment, in terms of, you know, your plans for next year, some channels that you are considering for your activity, and then I think we can, it's going to be hard to just draw one or two main action points for each stakeholder group but I think it'd be nice to help people go away or go home with some actionable points that they can think of, or implement straight into their businesses or their approach to business/marketing post this episode. But let's start with what you guys are doing at the moment and what you find interesting or plan to do with their marketing further than your future.

 

Kylon Gienger  

Yeah, sure. I think moving forward, we're looking to do more of what we have been right, which is connecting with more buyers, we've had hundreds of buyers now go through our training we've talked with 1000s. So we want to continue to do that and just provide education to folks looking into buying a business. I think in terms of marketing. A lot of our efforts next year are going to go into connecting with more business sellers. Right. As I said, your first step is finding that business and oftentimes that can be difficult. And when you do find really good businesses, oftentimes you're competing with a lot of other buyers, especially if they're on market deals, through brokers and such they're being marketed. What we're trying to do is connect with more off-market businesses, which means we're building digital marketing funnels to connect with business sellers rank for certain keywords like I want to sell my business or how do I sell my business or how to prepare my business for sale. These are leading to a landing page where we talk them through our process, that we have this whole network of really qualified buyers to buy their business that they don't, they're not going through a broker so they can save on brokerage fees. And the kind of call to action there and how we capture information is through we give them a business valuation a very rough ballpark, and we explain that but we say here, give us your business information. And we have a calculator in the background that spits out a bit of a valuation. And that's how we stay in touch with them. So, you know, early testing on that is going really well. And moving forward, we're hoping to build that funnel up more, so that we already have a strong funnel of buyers coming through if we can get a very robust funnel of sellers coming through those to meet in the middle and Acquira can facilitate that. And so far, that's going pretty well. So that'll be a big focus. As far as actionable advice for some of your entrepreneurs and business owners out there. Look, the advice I have to give where I'm in the trenches right now is buying businesses or talking to people who want to sell their business. And if you already own a business, unless you know for sure you want to keep this thing is it as a general generational business in your family for decades and decades, you should be thinking even from day one on how do you prepare this business for eventual sale, right. Because, if you do it right, you can make a lot of money and use it to retire or start the next, you know, three businesses or something with the proceeds. But people often don't think about this, I talk to sellers every day that have owned these businesses for 30 years, and it's only been in the last six months, they've started thinking about selling this thing, and they've got,  they could have had years to pair it and everything's a mess. So it's simple things like just putting yourself in the position of a brand new owner that may not even know much about the industry may not have run a business like yours, what can you put in place now in your business, that's going to make their job easier, and your business more attractive, which is going to increase the valuation. So it's things like system, like have job descriptions have to have systems for all the different roles and responsibilities and things procedures that are happening in the business document those, organise them well. Do a good job, you know, keeping your books-  have your finances done correctly, and clearly and have all those up to date your tax returns, that's a big one as well. Keep all these things updated, I'd update them every quarter in just a data room somewhere. So you're always prepared. If somebody wants to potentially look at your business to buy it, you can shoot them a link that's been updated within the last quarter last three months. And all your information is right there. Work on your marketing, work on your growth, work on your culture, have a really healthy culture and some great customer service. Again, put yourself in the shoes of a prospective buyer that doesn't know anything about your company. That's looking at it and stepping into it, the more turnkey you can make that business, the higher valuation you're going to have when you want to sell it and start that process. Just please start earlier rather than later. It could literally mean the difference of a million dollars in your pocket. I've seen that. Yeah.

 

Andrei Tiu  

Cool. And do you already have the calculator, you know, working on the landing page, because I think if you're okay, and you'd like to, we can also include this in the description of this episode? So people that maybe have, you know, their business and their activities that you opportunities out there. We have quite a lot of listeners from America as well. So you know, people can maybe access it and start a conversation through there with you and Acquira.

 

Kylon Gienger  

Yeah, so I mean, if you are a person who owns a business that wants to sell it, that URL is acquira.com/business-sellers. So Acquira.com forward slash business dash sellers. And you'll see that that landing page.

 

Andrei Tiu  

Okay, I made over it as well. And you guys will have the link in the description of this episode. So to check it out.

 

Kylon Gienger  

Yep. And if you're a buyer, you can essentially just go to acquira.com. And you'll see plenty of options there and some videos and some stuff. Our team's ready to talk to you as soon as today on what business buying is all about. And if it's something you want to get involved in, we've got some programmes you can jump in right away. Actually, the very first thing you'll do is go through sort of a business buying test drive, we put you in the driver's seat of a prospective buyer, and we give you all the data on a business we've already acquired and we kind of take you through the steps of diligence on that and so you can kind of test drive the idea at first so if you're interested in buying there are opportunities as well.

 

Andrei Tiu  

That's very cool. Okay, super. So anyway, the link to the website is going to be here as well. So you guys will be able to find all this information in the description of this episode if you are either watching it on YouTube or streaming on any of the other platforms. Kylon this was a very, very insightful talk. And I feel we covered a lot of interesting topics, it was very interesting to me as well, since we didn't have these topics covered on this episode before. Very good insights on the culture of the company as well. I always thought this would be one of the most important things that business owners should be looking at from day one. Really happy that we managed to touch upon it. In this episode, even if we only spent a couple of minutes, maybe we'll be able to potentially organise something in the future, tackling more of this topic and how you- I mean success stories from the companies that you own, owned, or have been involved with when it came to buying and selling and, you know, transformations that happen for the process.

 

Kylon Gienger  

Absolutely, Andrei. Well, it's been a pleasure, man. Thanks for all the great questions that I've enjoyed sharing what we do here.

 

Andrei Tiu  

Super. Yeah, this was great. So last question. If people want to personally reach out to you or connect with you, or you know, discuss specific subjects, where's best to get to you? Is it LinkedIn or other platforms?

 

Kylon Gienger  

Feel free. I have a personal website. So my name is Kylon Ginger. It's just kylonginger.com. So it's KYLON GIENGER. And on there you can there are links to acquire. There are links to other stuff I'm doing personally, as well as my LinkedIn and those are good places to reach out

 

Andrei Tiu  

Perfect. Okay, so you guys will have these links in the description of this episode, Kylon's website and LinkedIn profile as well. Kylon, again, very big pleasure. Thank you for being on the show. Thank you for the insights. Very, very interesting and very inspiring. Looking forward to catching up soon. And meanwhile, best of luck with all your ventures and with the new business that you're discussing right now. I'm sure things are going too good to go great.

 

Kylon Gienger  

Appreciate it, man. Thanks for having me. Cheers.