Dawn McGruer interviews Michelle Seiler Tucker, the best-selling author

Now we have a special guest with us today, and some of you may have been reading her bio. I know a lot of you were very interested in the topic because Michelle Seiler Tucker is pretty much the leading authority when it comes to buying, growing, fixing any type of business. And you're probably very well known in the mergers and acquisitions side of things. Probably, is it 20 years you've been now working in this niche?

Yeah. Yeah, so about 20 years. So Michelle is going to be talking to us about all sorts of things to do with exit strategies. She's going to be talking about growing your business, some tactics in terms of getting your business ready to sell.

But also she's going to be talking to us about her new book, and you might see in her background it's called Exit Rich. Now, Michelle, first of all, tell us a little bit about this new book that's just come out, because you've been on a fabulous journey. I mean, you've been in Forbes, you're featured on all sorts of publications, radio shows. Tell us a little bit about you.

Sure. So I've been in M&A, mergers and acquisitions, master intermediary for a little over 20 years. And before that I did franchise sales, franchise development, and franchise consulting. I've always owned multiple companies.

At any given time, I own five to 10 companies that I'm building to sell. So I really specialize in buying, selling, fixing, and growing. And it's my passion. You know, entrepreneurship is my passion.

I wrote my first book, my very first book, in 2013 called Sell Your Business for More Than It's Worth. And that book was more of just a blueprint on how to sell your business. When I did the research back then, though, I learned that, you know, 90, 95 percent of startups would fail in the first one to five years. And then several years later, I've been driving around meeting clients all over the U.

S. and Canada, and I keep noticing that I'll see a business there one day, next day the business is completely gone. So I started doing my research again and learned that in America, I'm not sure about the UK, but in America, the business landscape has actually flip-flopped. So it used to be that 95% of startups would go out of business the first one to five years are the most risky.

Well, now it's only 30%. Only 30% of startups are going out of business. So this is the best time to start your business. However, out of 27.

6 million companies, about those businesses have been in business 10 years or longer, 70% of those companies are going out of business. Seven-zero. This is before COVID. So you see how it's flip-flopped.

It used to be if you can make it past five years, you're golden. Your business is going to last a very long time. Now in America and probably UK, you hear about the big box, you know, public companies like Toys R Us been in business 75 years, goes under. Kmart, Steinmart, Pier 1, Godiva Chocolate closing down 1,500 locations.

GNC closing down 900 locations. But what the media is not telling us is about all the private companies on every street corner, in every town, in every state, and these business owners unfortunately are exiting poor. They're having to sell for pennies on the dollar, close their business, or even worse, file bankruptcy. So Exit Rich is very different than my first book, whereas it's not just about selling your business.

It's actually about building a business that will stay in business. So it will be sustainable, scalable, and when you're ready, you will actually have a sellable asset. See, this is it. I think you've hit the nail on the head.

So many people are still thinking, you know, there's a fear out there about starting businesses. But, you know, we've seen businesses that, you know, we know brands from growing up, you know, in our childhood, and they're going. So, you know, what are the keys? You know, if there were like, you know, a critical success factor, what would be the key in terms of making your business strong and making it sellable?

So the number one, the number one reason that businesses are going out of business, 70%. Now, remember, that's before COVID. Now, in America, every 10 seconds a business is closing down. There's over 10,000 businesses, 10,000 restaurants are going under.

So the number one key to success before COVID, we can give you before COVID and after COVID because it's two different things. So number one, success before COVID, the number one reason that businesses are going out of business is because they stopped doing what I call AIM. AIM. A-I-M.

AIM is always innovate and market. Business owners become complacent. They're married to their concept. They're married to their ideas.

They keep doing things the way they've always done them, and they stopped innovating. They stopped marketing. And the problem is, if you don't innovate, it's like Blockbuster. Blockbuster sold Netflix.

They had the opportunity to buy Netflix. They did nothing to innovate. Toys R Us changed nothing in 75 years. So if you don't innovate, then there are going to be competitors that are going to innovate, and they're going to pass you by.

Plus, you've got some really strong entrepreneurs that are doing startups and are looking at problems and finding solutions. And so the company that makes it the easiest to purchase their products and services is the company that's going to win. Amazon is winning because Amazon makes it so easy. You can practically buy anything.

You can practically buy a horse and have it delivered to you in two days. So that's the number one reason they're going out of business. As far as now, after COVID, one of the big issues is, you know, the industries are dying. So industries that were dying before COVID are now thriving and vice versa.

So the industries like restaurants, you know, hotels, etc., they just have to get creative. They have to think about how to do things differently, you know. And I use COVID as a wake-up call for everybody because a lot of business owners have one profit center.

They have all their eggs in one basket. Plus, they have one or two months of working capital. Yeah, you can't operate like that. You should always have congruent revenue streams and be diversified, and you should always have at least one year of working capital.

I think so many people have heard about, you know, being dynamic, pivoting during COVID. We've seen some people come out, you know, and they are totally different businesses. They're leaner, they're stronger, they're working more towards the consumer trends and also what consumers want. And this is something that I think we've needed in business.

And, you know, as much as we don't want the pandemic, there's some businesses that will really thrive from this because they have adapted, as you say, and then they've looked at innovation. We've seen actually a lot of people investing in innovation during COVID and using this downtime to research the market, look at their revenue streams, and try and add in more. If you could go back to when you first got into, obviously, this career, I mean, have you seen the way that entrepreneurs do business change? Yes and no.

It used to be when I first got into this industry that a lot of entrepreneurs didn't plan their exit because their plan was to pass their business on to their children. And a lot of them, you know, you did see family businesses go from generation to generation to generation. Now that's really changed. I will tell you, less than 10% of businesses are passed on to the next generation because the kids don't want your business.

Things have changed. I mean, kids want to create their own masterpiece. They want to, you know, find their own way. They don't necessarily want to follow mommy and daddy's footsteps.

So I always tell my business owners, you really need to plan your exit. I call this an exit-rich STGPS exit model, and you really need to plan your exit day one of buying or starting a business, and plan your business with the end in mind and then reverse engineer it. The problem is business owners never really think about selling. There's five ways to exit, but business owners never really think about selling until they have to due to an internal or external catastrophic event.

So that could be health issues, death, partners, divorce, you know, or COVID. And when you're trying to sell in the middle of the chaos, you're not going to maximize value because your business is trending downward, not upward. Best time to sell is when your business is in its prime. Exactly.

So when you think about businesses, I mean, I meet millions and millions of people online who talk about having a business, and I think one of the fundamentals that we look at when we look at online marketing is online presence and what your business model is. If you think about business models, so many people are their business, you know, and that's not sellable. And how do people make that transition from being the business to having something that is actually a business that they can sell, that they don't need to be involved in, and that they aren't the whole foundation and structure? Yeah, so you're absolutely right.

I mean, that's probably the number two reason that businesses don't sell. So in the United States, probably UK too, because I think, you know, we marry each other. But in the United States, 80% of businesses won't sell. That's according to Steve Forbes.

80%, 8 out of 10. That's a pretty big number. And Steve Forbes actually endorsed my book, Exit Rich. So they don't sell because, number one, a business owner never grew a business that a buyer actually wants to buy.

They've created a glorified job in which they go to work to every day versus a business that works for them. And that's the number two reason, is that the business is dependent upon the owner. Buyers aren't buying jobs. Unless you have the right people in the right place and you have a management team, they're not going to buy your company.

They'll pass on to the next. And so...

How do they make that transition? Well, first and foremost, they follow what I call the six P's, and they build their business to follow this infrastructure so that it is sustainable, scalable, can run without them, so be profitable, and when they're ready, it's actually sellable. So that very first P in the six P's is people. You know, you have to have people.

You don't build, Dawn, you don't build a business. You build people, and people build a business. Exactly. And entrepreneurs really have to get out of the mindset that this is my baby.

No, you got babies at home. You got babies at home. This is your valuable asset. We want to build your most valuable asset so you can sell it for millions when you're ready.

So you have to have the right people in the right position, and you have to ask the who question: who opens the door, who handles customers, who handles marketing, who handles legal, who handles accounting, who handles logistics, manufacturing, transportation, environmental. The list goes on and on and on and on. The clue here, Dawn, is you should never be next to the who. Exactly.

Because we really want to build a business that runs without you. I mean, I had a dentist that called me the other day. He's been in business 45 years, one dentist, three dental hygienists. He goes, Sean, I'm not going to stay for the new owner.

I go, Well, then you don't have a business to sell. Then you need to pay. Yeah. I had a sweet little old lady called us a couple months ago, and her husband dropped dead of a heart attack, left her with a mountain of debt.

And she said, Can you sell the business? And I started going through the six P's, and I said, No, it's not sellable because he had a job. He had this business job for 40-some years, no employees whatsoever, no processes, no nothing. Everything was in his head.

So when he died, the business died. And unfortunately, there was nothing to sell. So business owners really should think of their business as the most valuable asset and set it up for success and make sure you leave a sellable asset for your family. Exactly.

See, people think with product-based businesses, they tend to have, because it's very process-driven, they start getting people into those processes. I often see the service-based businesses, when everyone's got the knowledge in the head, and that's when they're not, you know, hiring the teams, getting the people in, and because it seems difficult. Is there a sweet spot in terms of, you know, when you, if you start a new business, in terms of getting it sellable, you know, do you start right at the beginning and with that mindset and grow it through? Yeah, to me, start from the beginning, and I don't think it matters if it's a product or a service business, because they all have to have processes.

I mean, we got a business right now that has two owners, and everything—they have a product company, they fabricate. They can fabricate anything for anybody at any time is what their slogan is. However, it's two owners that are in their seventies with four employees. So when they pass or when they sell, who's going to fabricate anything for anybody anytime?

It's not going to be their employees. So you really, really have to have these infrastructures in place, even for online businesses, e-commerce businesses, etc. So I'll tell you about the GPS Exit Model really quickly. So the biggest plan is, you know, nobody goes in business to—nobody fails to plan; plans to fail.

They fail to plan. So you're always going to have that exit plan. And I say from day one that you start a business or buy a business, determine your end game. When you want to drive somewhere and you pull out your phone and you pull out, you know, Google Maps, what's the first thing you plug in?

Your destination, right? Sure. If you don't plug in a destination, you're not going to get anywhere, or you're just going to drive around in circles. You know, and that's the same thing with business owners, is that they don't have a plan, so they drive around in circles and drive up and down the financial hills.

So pick a number. So your destination in the SCGPS XM model is your end game, your desired sales price. Pick a number. You might hit it, you might not, but at least that's the start of a plan.

You're aiming towards something. Yeah, you want to aim towards something. You want to drive towards something. So let's say you want to sell it for $20 million.

It's just a number. You know, if your number is $5 million, great, that's your number. If your number is $100 million, great, that's your number. Pick a number.

I just want people to pick a number. So let's say it's $20 million. Then you want to reverse engineer it. The GPS exit model now has your destination, but it needs to know where you're starting from.

It needs to know what's your current valuation. What are you worth today? And many business owners have never had a business valuation before. It's completely financial suicide to me because, you know, us humans will go to the doctor and get a physical checkup to make sure that we're still ticking and kicking.

We'll drive our car to the shop and make sure our car is running on all six cylinders. But when it comes to the business, the most valuable asset, they never stop and get their business valued. You know, I worked with a company the other day for 50 years. 50 years in business, never one evaluation.

You should get your business evaluated every single year because there are events that increase valuations and events that decrease valuations. You know, COVID is a perfect example of that, right? So let's say you want to sell for $20 million. You're worth $5 million today.

Now you need a no time frame. Let's say you want to do this in 10 years. Great, 10 years. Now you have a start of a plan.

Now you need to know who's my buyer is going to be, not buyer, buyers. Because if you have one buyer, sellers come to me all the time and say, Oh, I have a buyer. This buyer is going to buy. I'm like, Okay, yeah, let's see.

Buyer's not going to buy it, you know? So I'm like, I'll put money on it, and the buyer never buys it. You always have to have multiple buyers because if you put all of your eggs in one buyer's basket and that buyer falls out, you know, falls through, then what? Plus, how can you create competition?

How can you get massive value? How can you get the best price if you have one buyer? You can't. So, yeah.

So there's five types of buyers, okay? And so if you're trying to sell for $20 million, this is who's not the buyer. It's not going to be a first-time buyer. They're not going to buy your business because they buy small businesses.

They can't afford a $20 million company. A turnaround specialist is the second type of buyer. They buy distressed assets. The third type of buyer is private equity groups, PEGs.

They buy based on platforms and add-ons. The fourth type of buyer is strategists and competitors. Now, these are typically the best buyers because they'll pay more for synergies. And then the fifth buyer is a serial entrepreneur that's industry agnostic, and they chase EBITDA cash flow.

EBITDA is earnings before interest, taxes, depreciation, and amortization. So when your business, you know, when you want to sell your business for $20 million, not only do you have to know who the buyers are, but more importantly, you have to know what's the financial criteria. What do the gross revenues have to be? Gross profit margins.

Most importantly, the EBITDA. So if you want to sell for $20 million, you need to have an EBITDA between $3 to $5 million. And then you need to know what synergies are they looking for. Go ahead.

Exactly. So if somebody is in a business, regardless how old it is, any time length, give us an idea of if they would go and get Exit Rich, is this going to give them kind of walkthroughs of these processes you're talking about? Will they be able to kind of start mapping things out and getting an idea where they are in the process? Yep, yep, yep.

Well, they still will need to get evaluation. So my book Exit Rich is all about, you know, planning your exit from day one, going through what I call the seller's sanity check. When should you sell? And looking at your business and looking at your life, you know, when should you sell?

So it gives you the steps. Plus it gives you the steps to build the business on the infrastructure with the six P's and build those synergies. Because here's the deal: buyers buy synergies. Valuation depends upon not only how high your EBITDA is, but more importantly, what synergies you've created.

Yeah. And so we know the buyers. So we bring the buyers, and we can create a bidding war because we can bring, you know, two, three, four, five hundred buyers to one deal because we know the players and we know who's going to pay what for what synergies. And that's how we're able to get 20, 40, 65% higher selling prices for our clients.

Sometimes, I mean, our last deal was 126% more than what the business appraised for. Wow. Yeah, amazing. So there'll be many people listening to this thinking, how did you get into this business?

Where did you start? Did you wake up one day and think, this is where I want to be? Did you fall into it? What was your career background?

No, I mean, I never woke up and said, Oh my gosh, I'm going to sell businesses. I always knew I was going to be in sales because I'm a people person. I actually went to medical school and realized very quickly that wasn't good for me. But I have always, you know, knew I was going to be in sales.

I've always been in sales. I always knew I was going to sell high-ticket items, but I've always owned businesses. I knew I was going to be an entrepreneur. I've always been a writer, and I have owned quite many different businesses in many different verticals.

And then I did go to work for Xerox for a short period of time because they recruited me. And my nickname at Xerox was the closer because every time they couldn't close something, they would call me. They're like, Get Michelle to do it. She can close this.

She can close anything. And then my manager came to me and said, Michelle, you really should apply for the regional vice president position, you know, over 95 salespeople. And she goes, You'll never get it because you've only been here six months, and Xerox requirement is two years, and you're applying against people who've been here, you know, for years and years and years. I'm like, Well, why would I ever apply for something I'm never—

And she said, because of the experience, because of the learning. You know, she goes, You're going to learn so much during this three-month process that it's worth the experience. And I said, Okay, I'll do it. So I did.

It was a three-month process. She's right, it was a grueling process with all these high-level executives. We had to do Q and A's with them, presentations, demonstrations. And even though I was told I would never get it, I got it.

And so I got promoted into vice president, and I hated it. I hated it because doing management—I love leadership, I love management—but I don't love management in a Fortune 500 company. That's not me, because I like to get things done. I see a problem, I find a solution, and I implement it right away.

Well, with corporate America, Fortune 500 companies, you have to have a meeting, to schedule another meeting, to schedule a follow-up meeting. Yeah, and it feels like a bureaucratic kind of way of doing it. Yeah, and it takes—so I just didn't like it. So anyway, I ended up transitioning out of that and going into franchise sales, franchise consulting.

And my clients kept asking me, my buyers kept asking me, Do you have an existing business? Because we don't want franchising. We don't want somebody to tell us what to do all the time. And I'm like, You know, I don't, but why shouldn't I?

I can. So that's kind of how I opened up my M&A firm. I first started selling small businesses and then very quickly graduated to selling—you know, we sell 10 million and up. Yeah.

And now I do have agents to sell, you know, businesses under 10 million, but my sweet spot's 10 and up. And then I learned very quickly that eight out of 10 businesses don't sell. So then I started fixing businesses. So I really specialize in buying, fixing, selling, growing.

So I partner with business owners, investing my money, time, energy, effort. And then I put them on that build-to-sell exit model that I just told you about. I also buy businesses and flip them. We merge businesses together, and then we sell businesses.

So at any given time, I own five to ten businesses that I'm building to sell as well. Yeah. So if, you know, we've talked a lot about the pandemic and, you know, what's happened, being dynamic, getting these synergies in places, what is the, you know, the future? What do you see the biggest challenge for businesses in the next, like, three, six, twelve months?

Well, really depends upon the industry. You know, some industries are having their best year ever. Agriculture is doing great. Grocery stores are doing amazing.

Transportation is doing good. Anything home-related, home construction, home renovation, you know, swimming pools. I mean, people aren't traveling, so they're spending more money on their homes than ever before. So you really got to look at the industry and say, okay, well, what's the future for that industry?

I mean, restaurants are going to bounce back. Everybody is so tired of being home and not being out. You know, I just, like I said earlier, I think this needs to be a wake-up call that we all, you know, business owners need to do things differently. We need to have multiple revenue streams.

I'm diversified, so one business doesn't go well, I have four others. You know, I learned a long time ago in New Orleans, Louisiana, when Hurricane Katrina hit, I had all my business in New Orleans. Ninety-five percent of my companies literally went underwater with Hurricane Katrina. And I told myself back then, I will never just be in New Orleans.

I will have businesses everywhere. And so now I do. So I think, you know, we really have to look at our business with a different set of eyes. We need to treat our business as an asset, not as our kid.

And we really need to grow that business and make sure we set ourselves up for success, because you're always going to have catastrophic events. You're always going to—what's next? What's next? You know, I'm in New Orleans where we have hurricanes every year.

We're just going to be rolling to the next one, right? So you need to prepare for that. You need to plan for that so the next catastrophic event won't be so catastrophic for you. What's been the biggest resource that, you know, that you've really taken inspiration from, you know, be it like a mentor or, you know, a book, something that's made an impact in your life?

You know, I never had a mentor until probably 2012, 2013, 2014. I would say probably what makes the biggest impact for me is, number one, is me. I'm self-motivated. I'm determined.

I'm going to win. I'm competitive. You know, I'm resilient. You know, I think I'm probably my best resource.

However, yes, there's books I read, like I read Think and Grow Rich from the Napoleon Hill Foundation, The Art of the Deal by Donald Trump, Love Him or Hate Him, it's a good book, The One Thing by Gary Keller, you know, Rich Dad Poor Dad, and I have had some mentors along the way. But, you know, I think for me, because I've owned so many different businesses, I know what it takes. It doesn't matter what your industry is. It doesn't matter if it's service, product, whatever.

The steps are the same. The infrastructure is the same. So it's mindset really for you. I mean, this is a big thing.

I mean, I think even listening to you for five, ten minutes, you're a very energized person, and I think we could all get energized with you within that time. You know, I'm certainly, I'm like now thinking I'm going to go away and review my business and look at everything that we're going to be doing. But if people want to go and connect with you, Michelle, how can they get in touch? And most importantly, how can they get a copy of Exit Rich, Bearing in Mind our listeners and viewers are all over the globe?

Okay. So to get in touch with me, they can do a couple of things. They can go to my website, SilerTucker.com.

That's SilerTucker.com. They can text Michelle to 888-526-5750. When they do that, all my social media pops up.

Plus... My website's pop up, so you can go there, follow me on Facebook, LinkedIn, connect with me on LinkedIn. And then for Exit Rich, you know, I strongly encourage everyone to go get Exit Rich because, you know, we didn't really cover the six P's. We didn't cover valuations, negotiations, creating a bidding war, so much stuff we didn't cover.

It's all in the book, you know. And so I encourage everybody to go get the book. Sharon Lechter, by the way, is my co-author, and she wrote Rich Dad Poor Dad with Robert Kiyosaki. So she's a five-times New York Times bestselling author, plus she's a CPA, a financial literacy expert, and the advisor to many different presidents.

So, and then Steve Forbes also has endorsed Exit Rich, plus Kevin Harrington, which is the original shark on Shark Tank, wrote the foreword. They can get ExitRichBook.com now at ExitRichBook.com, and it won't be out till June.

However, we will email you the digital download. Anyone in the United States, we will send the hardcover to your doorstep. Outside the United States, you just have to pay extra for shipping. And then we will also give you a lifetime membership to the Exit Rich Book Club.

So the Exit Rich Book Club is me doing video training on all these different, you know, how to create a bidding war, negotiations, five types of buyers, the six P's, you know, and then also documents. So all the documents you need to run your business and sell your business. A lot of times business owners say, Well, I never saw a non-compete or employee handbook or organizational chart. It's there.

We also have sample letters of intent, all the bits, everything they need in one-stop shop. We also have sample letter of intent, but the letter of intent is very important if you want to sell your business, sample purchase agreements, due diligence checklists, and closing docs. They're all there not just for your review, but for your download. These documents alone are worth over $25,000.

So, that's a reason to go check out the website. So, one more thing I want to say. They also, if they pre-buy the book, they get a 30-day membership in the Club CEOs. And Club CEOs is a mastermind, an entrepreneur mastermind that I founded where we do hot seats, Q and As, and help business owners really pivot and figure out, you know, what they need to do next.

Perfect. Well, one final question that I have for you, Michelle, before we leave our live listeners, because there is so much that people can go and obviously, from a resource point of view, they can get the book, they can contact you. But if you had one thing that you could tell our listeners and viewers that, you know, would stick with them, something either a quote or a story, what would that be? I mean, a quote that I came up with a long time ago that I always use is my quote, actually.

I'm not stealing this one. My quote. Yeah, you know, it's hard to read the label from the inside of the bottle. You need an outsider's perspective to read the warning signs and keep you out of the danger zone.

So align yourself with a mentor, get an expert, you know, get somebody who's been down the road that you want to travel. Learn from someone else's mistakes instead of making them on your own. You know, you don't have to make mistakes because you can always find somebody else to learn from, and it will shorten your learning curve dramatically, and your path to success will be so much greater. Brilliant.

Oh, well, Michelle, you have been inspirational and very, very energetic in the way that you've delivered everything. I think people will be thinking differently, and, you know, this is what this podcast is about. So come and check out Dawn of a New Era at dawnmcgruer.com.

Again, when we post all of this across social media, you can always connect with Michelle. We will tag her in everything. And thank you for being a marvelous guest. Thank you.

And what have you planned for the rest of the day? Thank you, Dawn. Thank you so much for having me. It's been an absolute pleasure.

I can't wait to read your book. Oh, you. What are you going to be doing the rest of the day, Michelle? What's your podcast?

Podcast.

I think I have another five today, and then in between I work with clients. You know what, podcasts, honestly, I see the fact that podcasts are growing massively at the moment, and I only started our podcast last July, and we've hit the top 10% in global reach. So, very powerful medium, and I think something that more and more people are going to be using. I mean, especially in the pandemic when people are out walking, but great resource.

So I'm sure we're going to be seeing you everywhere, Michelle, but thank you so much for joining today. Thank you. Take care. Thank you for having me.

Thank you. I hope you enjoyed this week's episode, and don't forget I'm going to be with you each and every week. So download and listen on DawnMcGruer.com or on iTunes, and come and join us in our Facebook community too.

All the details are on the website, and I'll see you next week.