E23: 7 Myths You Must Know About Selling Your Business | Tanner Noble
Is your business worth what you think it is?
Many owners start the selling process with high expectations and assumptions that can get in the way.
This episode debunks common myths, explaining what truly drives a business's value and how to leverage strategic planning, growth, and key advisors to maximize returns. Come find out why engaging a business broker early could be your best move.
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Kellen Ketchersid
Kellen is a co-founder of Stag Business Coaching, business strategist, and a systems thinker. He leverages his extensive experience in biotech and consulting to empower entrepreneurs to navigate complex challenges with strategic growth solutions.
Albert Gillispie
Albert is a serial entrepreneur, business efficiency expert and co-founder of Stag Business Coaching who has founded several multimillion-dollar companies. With expertise in optimizing operations and innovative systems, he mentors business leaders who want to unlock their business’s full potential.
Tanner Noble is a Senior Business Advisor with Transworld, with 16 years of finance experience across various industries, including retail, biomedical manufacturing, and commercial real estate. As a Partner in a Private Equity Firm focused on Multifamily Real Estate, he managed over $100M in assets. Tanner specializes in connecting business buyers and sellers in Lubbock, Texas, crafting personalized strategies to navigate complex transactions.
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EPISODE 23 TRANSCRIPTION
The Series on Business Brokerage
[00:00:00] Albert Gillispie: Today's episode is a special episode. It's actually going to be a series. A few episodes ago, we had a business broker, Tanner Noble, on, and we got a lot of great responses. So we wanted to devote a few episodes to really unpack it. What does a business broker do? What does it look like to be a buyer? What does it look like to be a seller? And in this episode, we start off by dispelling a lot of the common myths around selling your business. I'm sure you've heard many cliches over the years, like, "My CPA told me I could sell my business for five times what I bring in," or myths like, "They’re going to come in and fire everybody who works for me." There are so many myths that we walk around with without realizing it, and we dive into that on today's episode with Tanner Noble. I think you're going to enjoy it.
[00:00:58] Kellen Ketchersid: Welcome to the Business Growth Masterclass Podcast, where business growth is made simple. Join us as we explore practical strategies for streamlining operations, boosting profits, and creating stable, more valuable companies. We bring you stories from industry leaders, sharing their wins, losses, and everything in between. Here we go.
[00:01:22] Albert Gillispie: All right, we are live. Welcome to the podcast, our own local business broker, Tanner Noble.
[00:01:31] Kellen Ketchersid: How's it going, Tanner?
[00:01:33] Tanner Noble: Hey, good! Glad to be here.
[00:01:35] Albert Gillispie: For the second time.
[00:01:36] Kellen Ketchersid: Yeah, we've been looking forward to it. We like to start out with a little bit of an icebreaker. So, what's a myth that you've heard about selling a business?
Misconceptions About Business Valuation
[00:01:45] Tanner Noble: That's a great question. The number one myth I think is, "I could sell my business for one to three times my revenue."
[00:01:53] Kellen Ketchersid: Okay. Y'all heard this one?
[00:01:54] Albert Gillispie: Uh, yes. Well, tell us more, though.
[00:02:00] Tanner Noble: So, I think people get this from many different sources. You know, they hear a multiple and think it’s of their top-line revenue, and that’s just not true. I mean, you can have a business that's bringing in $10 million but is losing a million. How much would you pay for a company that's losing a million dollars? You wouldn’t pay $10 to $30 million. So, yeah, that's probably the number one myth—people really overestimate what their business is worth.
[00:02:30] Kellen Ketchersid: So, I would imagine as a business owner, if I want to exit and sell, I need to know the right framework for selling my business. Do you have a process you walk clients through when they want to sell?
[00:02:46] Tanner Noble: Yeah, absolutely. In fact, one of the objections we often get from sellers is that they’re “not ready to sell.” So, it’s like, okay, that’s great, you’re not ready. But what would make you ready? Do you have a plan for when you want to sell?
[00:03:05] Tanner Noble: Part of what I do is help the business come up with a valuation—what’s it worth today, and what do I think we could sell it for? If that’s not appealing to them now, then it’s about figuring out how to get it to a point where they would want to sell in the future. I help walk them through the different levers they can pull to tweak their business and increase the value.
Importance of Valuation and Growth Planning
[00:03:24] Tanner Noble: If it’s complex and they’re focused on their business, sometimes they might need guidance to get to that next level. That’s when I recommend they contact you guys. Seriously, having a coach help guide them through that process is invaluable and could really help grow their valuation. Stag Business Coaching is fantastic at this—I’ve already heard clients say it’s the best money they’ve ever spent on their business. Highly recommend you for anyone looking to get ready to sell.
[00:04:17] Albert Gillispie: I appreciate that. I really do. Taking a step back, we wanted to do this episode and this series with you for a couple of reasons. First, we had a great response from your initial podcast. It was a completely different paradigm and industry from what people are used to. We wanted to devote a three-episode series to unpack it, and you’ve already kind of set the stage for us.
Addressing Unrealistic Expectations in Selling
[00:05:00] Albert Gillispie: We wanted to start first with some common misunderstandings, because it seems like a lot of your initial conversations involve overcoming these misunderstandings. You started with a big one—people walking in, saying their CPA told them their business is worth three times the revenue or five times their net income, and you're thinking, "I wish your CPA wouldn’t say that," because it creates a tough starting point, overcoming those misunderstandings and myths. Maybe you could set the table a bit on those initial conversations and the common myths and misunderstandings people have, and why it's so challenging.
[00:06:00] Tanner Noble: Sure. Like I mentioned, one of the first things is often the expectation of value, which we’ve already addressed. The second one, like you brought up, is the “My CPA told me…” or “My attorney told me…” or “My realtor told me…” That brings us to another myth: people think their CPA, lawyer, or realtor can sell their business. But the reality is, they’re not experts at selling businesses; they’re experts at being an accountant, a lawyer, or a realtor.
[00:06:34] Tanner Noble: Especially with lawyers. A lot of people think their lawyer can handle it because they do all their transactional work and know about their business, but if they’re not in it day-to-day, a lawyer who’s just your buddy can really ruin a deal and cause it to fall apart. You definitely don’t want that to happen.
[00:06:55] Tanner Noble: Another one is with realtors. Realtors are great at selling real estate. I am a realtor and have my license, which is helpful for a business broker because we can handle the real estate part. But selling a business is a totally different expertise. There are so many factors involved in valuing a business versus real estate. It’s not only about the front end and the marketing piece. Marketing is critical too, because business brokers market on platforms where business buyers are, not on real estate marketplaces.
The Marketing and Negotiation Process in Business Sales
[00:07:39] Tanner Noble: Another piece is once you find the buyer and negotiate the offer, getting to the closing table is a whole other level of expertise, communication, and guidance. Think about when you buy or sell a house. You go through ups and downs, wondering if you made the right decision, or if it’s the right house. The realtor is there to guide you through those psychological ups and downs. Every hurdle—like the inspection report—might show issues, but most houses have some problems. It’s the same with a business. Buyers will see things that need improvement, and you want someone to walk them through why those issues exist and how they’ll impact the deal.
[00:08:40] Albert Gillispie: I’ll stop there for a second. That was well-articulated and different from what I’ve heard about the value of a business broker. It reminds me of selling a house. When you get that inspection report, you think, "Holy crap, I’ll have to redo all the plumbing in my house to sell it, and I’ll have to pay for all of it."
[00:08:59] Albert Gillispie: Extrapolating that to a business broker, there are so many points in the negotiation where the seller’s counsel will demand something. Having someone in your corner who has been through dozens or hundreds of transactions, who’s seen it and knows how to negotiate and what’s appropriate, is invaluable. You need someone like that realtor who can calm you down and say, "Hang on, we’re not going to do that. Yes, this is a house built in 1990, so some mechanical systems will be dated. That’s just part of the overall pricing."
[00:09:48] Albert Gillispie: Some of the smaller details, like giving an allowance for new carpet or a roof—we can do that. But having an expert in your corner who can help negotiate and know where to give and where not to give is a different set of experiences than even your own attorney or buddy. You articulated that super well. That’s great.
Managing Buyers Without Hurting Business Operations
[00:10:18] Tanner Noble: Thank you. And really, that leads to the next myth, which is, "I can sell my business by myself." Can you imagine taking your focus off your business to deal with buyers? Whenever I'm selling a business, I have tens, 20, even 100 buyer inquiries on a business, and they’re asking questions. There’s a lot that I filter out for the seller as a business broker.
[00:10:48] Tanner Noble: Not only do the buyers have questions, but I have questions for them: "Can you show me that you can purchase this business? Why should the seller sell this business to you?" As the seller, if you start going down that road and try to field all those calls and questions, you're taking your foot off the gas of your business. Your income starts declining, and so does your bottom line—therefore, your value. You don’t want that. You want to be going full throttle during the process of selling your business to achieve the highest value.
[00:11:24] Kellen Ketchersid: Right, so the worst thing you can do is take your eyes off the ball while trying to sell it. So if I'm a business owner and I’m thinking I want to sell at some point but don’t know if I'm ready right now, is it good to just start the conversation with you and learn what I need to be doing?
[00:11:46] Tanner Noble: That's a great question. Another myth is, "I want to sell my business in three months." If you want to sell your business in three months, we should have talked a year ago because it takes an average of eight months to sell a business in the U.S. right now. That’s just the average. So, if you’re wanting to sell soon, you need to talk to a business broker now. If you’re not sure when to sell, or you’re looking to sell in five to ten years, you still need to have that conversation. A business broker can help determine what the value is today and guide you on how to reach the point you want to be.
[00:12:24] Tanner Noble: For example, let’s say you want to sell in ten years. There are things a business broker can look at in your business and help you determine, "Look, if you keep doing it this way for ten years, it might not be sellable, or it will be harder to sell." But if you focus on certain aspects over the next ten years, you’ll grow the value of your business, making it attractive and sellable. At that point, both the broker and the buyer will be happy with the transaction. So, really, it doesn’t matter when you want to sell; getting a broker involved now is the right time.
[00:13:10] Albert Gillispie: I love creating that map and seeing the light turn on in a business owner’s eyes when they realize, "Today, my business is worth a million dollars, but if I reduce my customer concentration so that not all my revenue is coming from one customer…"
[00:13:32] Tanner Noble: You want to increase your customer concentration.
[00:13:34] Albert Gillispie: There you go. Wait, is that right?
[00:13:36] Tanner Noble: No, it’s true. Increasing concentration is… yeah, cut that out. Edit that out. We want to change the customer concentration so we’re not overly dependent, with less than 25 percent of the revenue coming from any one customer.
Key Drivers That Impact Business Value
[00:13:52] Albert Gillispie: Exactly, one customer. Right. Okay, that’s one lever to pull. Another lever is, okay, if we can increase revenue to a certain point, there’s a threshold where above that you get a much bigger return. So, yeah, we need to grow revenue by X amount. A lot of it is about creating a business that’s less and less dependent on the owner.
[00:14:18] Albert Gillispie: Giving someone that clarity—yes, it’s worth a million dollars today, but if you do these three, four, or five things, it could be worth 10 million—then finding people to help you achieve that is key. That’s what we do at Stag Business Coaching. That map you’re talking about, no matter where you’re at in your business, is so valuable. Whether you're just starting or thinking about selling, understanding what makes a business valuable is just another tool, another piece of information that helps build a healthier, more stable, and more successful business.
[00:15:03] Albert Gillispie: I wish everyone would come talk to you, get a current valuation, see what a best-in-class valuation could look like, and understand what steps they need to take to achieve it. That’s really important. That’s such valuable information—I wish everyone had that.
[00:15:16] Tanner Noble: Yeah, absolutely. And I'm sorry to interrupt, but I love doing that. I love being able to show someone, you know, look, here is your value. And then, like you said, when the lights come on and they're like, "Oh." I had a client come in a couple months ago, and they thought they wanted to sell. When I showed them the value, it took the wind out of their sails. The value was a lot lower than they expected it to be, but I showed them that if they did certain things, they could get that value up. That completely changed the conversation.
[00:15:55] Tanner Noble: Now, they went back in and want to come back in six months. They want to spend six months working on those things to see how it changes. They want to keep checking in, and that is a fun conversation to have. I really enjoy helping people uncover that. And if you want to hear more about those levers to pull, like you were talking about in our first episode, we go into more detail there, so feel free to listen to that one too.
[00:16:26] Kellen Ketchersid: I think a lot of business owners fail to realize that the more the business depends on them, the less valuable the business probably is in an exit. I would imagine because it's like, if I'm the buyer, what am I buying? If it depends on the previous owner, I'm basically just getting a client list at the end of the transaction. So, having business owners go through that process of making it more turnkey and self-sustaining and process-driven is such a key thing.
[00:16:57] Kellen Ketchersid: So if I'm a business owner and I'm thinking to myself, "Well, I'm making a lot of money already. Why would I even want to sell my business?" What would your answer be to someone like that?
[00:17:09] Tanner Noble: Yeah. Why would I want to sell my business? Right. And so, yeah, the answer to that is a business is worth the most when it's making the most money. For example, I have had clients where they’re maybe about to retire. They're in the last years of their business, and so they've really slowed down over the last five to 10 years. They've just kind of coasted. They haven't been in growth mode. They did that when they were younger. Well, because they waited so long to sell their business, now the value is lower.
[00:17:40] Tanner Noble: If they had sold whenever they were 10 years younger, when they were at the height of their revenue and profit and doing the best they could, that’s a way more valuable business. Then, they could take that money and invest it into something else, either another business or another investment. I'm not an investing advisor, but taking that money and investing it could make more over the long term than if you just wait until your business is in a slow decline and then sell it off.
[00:18:35] Albert Gillispie: So much of this is a personal decision of when is it time to sell? A lot of this conversation is about being proactive and engaging a business broker earlier to determine, "What do I want? What's the end game here?" If it’s, "I started a plumbing company, and I want to do this until I'm ready to retire," that’s great, and that’s an answer.
[00:19:04] Albert Gillispie: And let's figure out the best—like, what you should be working on, so when it is time to retire, you can get the best value for it. But if it's something, you know, "Yeah, I'm going to grow this for a season, and then I'm going to sell it. I want to sell it at, you know, 10 million and then go and do the next thing. Once my kids moved out of the house, I'm going to want to move and do this or that." I think the point here is decide what you want and go get the information from a business broker of what does it look like at various, you know, checkpoints within the life cycle of your business and then make an educated decision. And I think so much of this is getting that information to make an educated decision about when and how much for your business.
[00:19:56] Kellen Ketchersid: Absolutely. Yeah. I'm just—my mind is blown at the idea of having a business and over the last 10 years, I could have had, I could have done better. I just—selling it 10 years ago, and you know, the last 10 years have just kind of been unnecessary, and now I'm getting less for my business, and I worked for the money that I could have made investing or doing something else. So yeah, just going to the right person like you and learning this, you know, before it's too late, so I can make those strategic decisions. And what I'm hearing is you don't know until you talk to an advisor, broker, because it's like, there are so many things that the average business owner—you don’t have time to think about it. And you really wouldn't know unless you're talking to an expert.
[00:20:41] Tanner Noble: Yeah. And you don't want to wait until what I heard at a conference I went to—the dismal D's. So, there’s death, divorce, declining sales that we talked about, or dissolution, like a partner split. You don’t want to wait until one of those things is happening because then all of a sudden, you're going to have to sell. And it's like, you have to sell now, so you're probably going to have to sell it at a discount. So, yeah, that's another thing—you don't want to wait for one of those main big events in your life to happen, and then all of a sudden, it's like, "What do I do?"
[00:21:17] Kellen Ketchersid: Well, and I know a lot of business owners that we've talked to, it's like, they're good at something that built the business originally, and maybe to get the business, the most value for that business in an exit, they need other skill sets involved.
Why You Shouldn’t Wait to Sell Your Business
[00:21:32] Kellen Ketchersid: Yes. And going through you and then connecting to either business coaches or the right team on some aspect of their business is so crucial. Cause it's like, man, that's going to get me to that place where I can have that exit that lets me do what I want. And maybe doing what I want is still being involved in the business, but under a new ownership that’s paid me for what I've built or, you know, it can take a lot of different forms, but it’s really cool.
[00:21:57] Tanner Noble: All right. So I got another one if you want me to go to another myth.
[00:22:02] Albert Gillispie: Yeah. Hit me with one.
[00:22:03] Tanner Noble: Yes. So, another one is, "When I sell my business, the new buyer is going to fire all my employees." And there are horror stories out there about this.
[00:22:19] Tanner Noble: And, you know, in the leveraged buyout era, that was a big strategy of big companies—to go in and buy out a company at a low value and then fire everybody. But that's really not traditional in small business M&A. The people that make up your business, your employees, are the lifeblood of the company. And that buyer is going to want them to stay on to run the business because they’re already doing well running it. Why would they want to go in and mess that up? They’re buying the business because it’s less risky to keep it going as it is. So, they may make changes, but ultimately, they’re not going to go in and just get rid of everybody. They want to keep the employees and all their know-how.
[00:23:12] Albert Gillispie: That is such a common fear with people we talk to. They think it's some group from Chicago that's going to come in and just cut everyone's jobs. And sometimes that can happen, but more often than not, given a certain buyer pool that we’re putting together, it’s people who see the value in the system and business. Hopefully, it’s this well-oiled machine that they're buying, and they want to come in and make everybody happy and figure out how they can continue the progress you’ve set over however long. Overcoming that is a big fear and often a myth for business owners.
[00:24:01] Kellen Ketchersid: So, why in the world would I sell my business if I'm only going to get two times what I make in a year after I pay for your commission and everything? What would you say to a business owner who asks you that question?
[00:24:15] Tanner Noble: Yeah. I mean, usually in that situation, it's someone who has a motivation to sell. Like, if making that money year after year works for you, then why would you sell? Maybe now's not the time to sell. You could wait for one of those dismal D’s—death, divorce, or whatever—or you could sell it now and get the value you want out of it. Usually, like I said, when someone's coming to me and they're needing to sell at that price, there's a reason, like they're moving on to the next thing for some reason. So, yeah, that’s what I'd say to that one.
[00:24:56] Albert Gillispie: And talking to you and understanding some of those levers to pull could potentially get a lot more than just a 2x.
[00:25:05] Tanner Noble: Yeah. Yeah. And every business is different with the multiple. I mean, we could have a whole conversation on multiples, but every business and every industry is different. There are unique things about similar businesses that would cause a multiple to go up or down, even with two very similar businesses. So the 2x thing is just a general guideline I threw out there.
[00:25:29] Albert Gillispie: Well, before we get to the fire round, we’ve got a couple more episodes we want to do in this series. I don’t know if you want to tease either one of these, but one of them is about seller expectations and going through the sales process—what they can expect, what that process looks like, and some best practices. And then, on the other side, we want to do another episode about buyers—what they can expect going through the process and the best practices on that end. I’m really looking forward to continuing this conversation, educating the public, dispelling some misunderstandings and myths, and illuminating best practices to buy the best company and sell your company for as much as possible.
[00:26:24] Tanner Noble: I want to give one little teaser about the buyer expectations episode. I’m making it a personal mission to bring buyers from outside of Lubbock into Lubbock. I think Lubbock is an awesome place to buy a business, to grow your family, and to invest in the community here. We’ll definitely be talking more about that on that episode.
[00:26:44] Albert Gillispie: Great.
[00:26:45] Tanner Noble: Looking forward to that.
Fire Round
[00:26:48] Kellen Ketchersid: All right. Are we doing a fire round?
[00:26:50] Albert Gillispie: Let’s do a fire round.
[00:26:53] Kellen Ketchersid: Tanner, what’s your favorite movie?
[00:26:55] Tanner Noble: You know, I’m really bad at picking favorites because I like so many things, but I think my favorite is The Departed. It’s got so many twists and turns. It’s intense. I kind of like mafia-style movies, and that one’s probably my favorite.
[00:27:13] Albert Gillispie: Cool.
[00:27:13] Kellen Ketchersid: What’s your favorite book?
[00:27:15] Tanner Noble: Think and Grow Rich by Napoleon Hill. I’ve read a lot of books, but I’ve read Think and Grow Rich at least six times, maybe more. I wish I’d tracked them like you do, but I always find solace in that book. It gets my wheels turning and keeps me grounded.
[00:27:28] Albert Gillispie: What’s that book about? Give me a synopsis.
[00:27:32] Tanner Noble: It’s about creating goals. When I think about it at a high level, what I get out of it is dreaming about where you want to be and figuring out how you want to get there.
[00:27:50] Tanner Noble: Like, what’s the first step you could take toward that? And then it’s thinking about that all the time, just really focusing on what you, what you think about is what you become, you know? And so, personally, I tend to get into a funk sometimes, like, you know, it comes in cycles where I get down on myself or feel stuck, and then I read this book and remember, "Oh yeah, I just need to think about where I want to be."
[00:28:16] Tanner Noble: The title Think and Grow Rich—when you first tell someone about it, if they’ve never heard of it, they might think, "Oh gosh, you just want to be rolling around in dollars." And yes, there’s a financial component, but it applies to any area of your life—your family, your faith, your fitness. So that’s what I like about the book.
[00:28:43] Kellen Ketchersid: That’s cool. We all need a pick-me-up sometimes, just to refocus on the things that we’re really aiming for. So that’s great. All right, so what’s a quote or words of wisdom that you try to live your life by?
[00:28:55] Tanner Noble: The quote I remember from early on, outside of scripture, is, “If you think you can, you can.” And I think I know that because we had a book. Isn’t there a train book?
[00:29:04] Kellen Ketchersid: Oh yeah, The Little Engine That Could! Is it in Dumbo?
[00:29:11] Tanner Noble: I think it’s the train in the Dumbo movie. Am I wrong?
[00:29:11] Kellen Ketchersid: I don’t know!
[00:29:16] Albert Gillispie: The Little Engine That Could is what I'm thinking of.
[00:29:19] Tanner Noble: We’ll follow up with that next episode, but shout out to Dumbo. If you think you can, you can. I mean, it kind of goes back to Think and Grow Rich too, but it’s like, what you think about, that’s where you go. And you know, there are so many times in life where you come to these obstacles, and if you just say, “Oh, I can’t,” then you’re proving yourself right. If you think you can, though, pretty good chance you can.
[00:29:40] Kellen Ketchersid: Yeah. That’s good. We talk to our kids about that principle.
[00:29:44] Albert Gillispie: All right, man. See you back next week?
[00:29:46] Tanner Noble: Yeah, looking forward to it.
[00:29:47] Albert Gillispie: All right. I hope you enjoyed that episode. Keep coming back! We have another two weeks with Tanner as we go through this business brokerage series. And if you enjoyed that and want to continue growing in your business and education around business, go ahead and click subscribe now and keep coming back, because there’s more where that came from.
[00:30:09] Albert Gillispie: And if you are a business owner and feel stuck in your business—if you feel like you can’t work on your business to grow it—go to our website, stagcoaching.com. In the upper right-hand corner, click to take our free business assessment. In just a few questions, in just a few minutes, it can diagnose what’s going on in your business, what’s going right, what’s going wrong, and what you can do about it. It’s free and easy, and it’s on our website at stagcoaching.com. Thanks.
