109. Building To Sell With Rick Moore

But it wasn't acceptable to me that people were at this stage of their life, they built a nice business and that, you know, in their 60s, they just said, hey, we should just keep working and forget about, you know, our retirement years for a while.

Welcome to Professional Builder Secrets, the podcast for building company owners wanting to grow safely and securely. I. I'm your host, Will Blunt, and today I'm joined by one of APB's executive business coaches, Rick Moore. Rick, welcome to the show.

Well, thank you, Will. Thank you for having me.

Really excited to have you on the show today. I've heard some amazing things about the work you're doing with builders since you joined the apb. So do you want to give the listeners a bit of a backstory on how you let what led you to here?

Sure. Well, I've had a fairly lengthy career over four, four decades now. Started in the capital markets business, which was financing and advising business owners in both public and private sphere. So I did that for many, many years. Literally hundreds of companies ended up going to the other side of that business, which was the private equity side of the business where we were now buying those types of businesses. And from there, and from experiences there in buying the businesses, I realized how ill prepared many of the business owners were at that stage of their career that really important. You know, they worked all those years to grow a company. Now it was time to sell and relax and retire. And they weren't going to get what they wanted out of the business. And that really hit my heartstrings. So I entered the realm of business coaching. First to help the companies that we were buying, but also to help other companies and make. Make that kind of a legacy, if you will, of helping as many business owners as I could. I ended up getting certified in four different areas of business coaching. And I was the CEO of the world's largest business coaching company for their Canadian arm. From there, I discovered the association of Professional Builders. And it really was bringing together the best of everything that I'd come across in business. And they were doing it for a specific industry. And that really meant a lot to me. So I decided that this would be a great career path for me to help a specific industry, a great industry, but one filled with challenges and join an organization like the APB who has in my mind, the best set of protocols and coaching systems available.

Great. You mentioned you're in Canada. Whereabouts in Canada are you based?

I am in Calgary, Alberta, Canada. I'm a native of Calgary and it's a beautiful place right at the foot of the Rocky mountains. And my family's been here for over 100 years, so I guess I'm going to stay.

Yeah, beautiful part of the world I'd love to see more of.

Yeah, well, come. Come anytime.

Yeah, I also see as well you've got a guitar in the background. Is that just decor or do you have a side rock rock gig as well that you're doing?

Members of my family wish it was just decor but I do like to how I unwind really. I just like to get on and noodle around on it a little bit.

That's nice.

Certainly not a practicing musician or anything, but something I took up when I was about 14 years old and have kind of, you know, just. It's just something to pick up and. And unwind with.

That's nice. What type of music do you play?

I am, I like country music. I like, you know, folky music, that kind of thing. And then classic rock for sure. But because it's an acoustic guitar find myself and fact that I'm from Calgary, Alberta. Country is kind of where it ends up most often.

Yeah, you can really get some good sounds out of an acoustic guitar. Playing country style music.

Yeah, yeah, absolutely.

Okay, enough about the guitar. Let's talk about business. So you wrote a business book called scale up to Sell. What inspired you to write that book?

Yeah, it was in the private equity part of my career we had. I'd left after 32 years in the capital market side where I was working with business owners. Now we were on the buy side and I was starting to see how ill prepared business owners were. And keep in mind, we were actually. These were the businesses that were salable. We wanted to buy these businesses but it was still an issue where these owners were dismayed, disillusioned with what they were being offered for their businesses. We were among the fairest people on the street. We were really wanting to give them a very good price. But there's limits to what you can pay for a business. And I just discovered that people were really dismayed. So in particular, we were sitting across from two business owners, a husband and wife. We'd gotten to know them pretty well. The first thing that had happened to them was their adult children. Both worked in the business. When the parents said that they were ready to sell, they just assumed the kids were going to take it over as many business owners do. And the kids said, you know what, we're really not interested in that. So now they had to go out and find an outside buyer. And we had Gotten to know them, they were interested in, I think they bought a place in Arizona. They were golfers. They, you know, they had it all planned out because they mentally sold the business already. And we, we were talking about what we could pay, and the husband turned to his wife and he said, if that's all we can get, we might as well just keep working. And I call it an epiphany moment. I don't know if it happened right in that moment, but it certainly left this impression on me that I've got to do something. I'm, you know, I know I'm on the other side now, and I'm supposed to be wanting to get the best deal possible, but it wasn't acceptable to me that people were at this stage of their life, they built a nice business and that, you know, in their 60s, they just said, hey, we should just keep working and forget about, you know, our retirement years for a while. So I just decided that it was time for me to get back on that side, work as, as a coach in any way I could to, to help business owners create value and understand that they could get in that 20% of businesses that are salable at the end of the life of the business owner. And that statistic is just wrong in my mind from the standpoint of the risk that business owners have taken on and what they deserve. They've worked hard, they've created something, they've created jobs. And only, and this is a worldwide statistic, 20% of all businesses are saleable.

Yeah, that's quite alarming.

That's a sad statistic. And keep in mind, those are businesses that already defied the odds and stayed in business past the 6.9 years or whatever it is that an average business, businesses life cycle is.

Yeah, that's crazy. Now, I'm sure there's a lot of builders out there that have come to that, that exact same conclusion at some point that they feel like they don't have something valuable enough to sell.

Yeah. And, you know, just saying, okay, I'll just sell it for the sum of its parts and, you know, sell my equipment. That's, that's kind of sad because you probably have. I mean, there's people living in homes that you've built. There's a legacy out there, and that legacy should be able to be carried on either by, you know, certainly a family member, somebody that is close to you, or maybe a younger you, you know, somebody that wants to get in the business and they don't want to start right from scratch. Maybe they Want to step in and, and carry on your legacy for you. And that's, that's really, I think, really important to everybody. It's important for the business. It's important to me. It's important to, certainly to the APB that we're helping create these legacy businesses.

Absolutely. So that was what inspired you to write the book. What's the book about? What's your overview? What's the synopsis?

Yeah, So I identified 10 blind spots, and this is from my experience. What were the things that were robbing a business of its value when it was time to sell? Either robbing of its value or robbing it of its ability to even be sold. So there was these 10 blind spots. There's. There's more than 10, but these were 10 that I had experienced. And in my book, I actually have, you know, a story about each one that I experienced and how I worked with. With owners to. To recover. So really it's. It, you know, it starts with. Starts with an owner being so integral to the part, to their business that without them, the business won't run. It won't run profitably. And, you know, in the moment that stops them from being able to take time away. It leads to them working way too many hours, all of that. And I call that the owner's trap. And that would be the number one blind spot. But all the other blind spots are kind of part of it.

Yeah, 100%. And I think that's something, I mean, everyone can resonate that's run a business before, especially builders, just feeling as if you can't step away.

And so, you know, the ability that you have as a business owner to work with somebody like the apb, work with a coach that has systems in place that will hold you to you accountable to developing those in your business is the way to escape that owner's trap. It's the way to have a life outside of your business and your business. You know, a business, a profitable business, a scalable business, should operate almost on autopilot, right? The systems are in place, the people run the systems, but the people can be interchangeable. That includes the owner being able to go away for, you know, a month at a time if they need to, to go and, you know, unwind and spend time with their family. So if the systems are in place, the procedures are in place, then you just have to, you know, you have to hire the right people, obviously, good, solid people. That's another aspect of any great business, to have a great team in place.

It's almost a Bit scary to be replaceable though, as a, as a business owner.

You know, that's interesting that you say that. So think of a builder who is very, very proud of what they do. They got into that business because they are fantastic at what they do. That comes with an ego. That comes with making a decision. I don't want to work for somebody else. Right. I want to be the boss. And now you are the boss. And it's hard to just shed that armor a little bit and be vulnerable and say, you know what, there are people that, that can, can do this and I can step away. It's hard to do. But it's, it's very important that you establish that, establish your business so that it can run without you. And then you've got all the choices in the world. You might not want to even sell it. You might just want to, you know, hire a general manager to run it for you and just, you know, be the chairman, if you will. So it just opens up all sorts of avenues for you. And, but it does start with, you know, letting that ego go a little bit and knowing that there are other people out there that, that enjoy and are capable.

Yeah, it's interesting. It's almost like being able to take more holidays and stepping away from the business. The things you do to achieve that are very much the same as the things you would do to build a sellable asset.

Yeah, they really are. The, yeah, it all flows right. The, the, the sooner you can put that into your business, the better all off you are. Because it might not just be about, I want to take a month off here or I want to be able to go off and do, you know, recreational things. It might just be, or it is having the time for you to be the business person, the owner of the business, to sit above the business and work on the things that, that help it grow. Not the day to day. I talk about often the difference between the coach who's down on the field and here. You know, we're, we're hockey people here in Canada. The general manager who sits up in the press box watching the game. The coach is very much into the minute by minute, who's on the field or who's on the ice at a given time and what, you know, the day to day stuff. Right. That you, those decisions and then the general manager, if you will, is up above saying this, there's somewhere where we need improvement. I'm going to go out and find a player that's really good at that or I'm going to Trade this person or this guy for this guy, somebody. You know, things like that are very integral to growing a business. And if the owner can't do that, if the owner is involved in the business day to day, you know, right from being on the tools to, you know, driving around doing estimates and, and all of that, that really doesn't allow you as a building owner to grow the business. You've got to be able to, you know, be, be larger than that, more of an overseer than that, I guess.

I like the hockey metaphor. I'm heading to Canada for Christmas actually, and my wife's family are all Toronto Maple Leafs fans, so we're heading to, heading to a Leafs game, hopefully.

Well, there you go. Yeah, they're, they are having their own little set of problems right now, but that is, that is a rabid fan base.

Yeah. Yeah, exactly.

We're all, we're all pretty, pretty crazy hockey centric people here in this country for sure.

Who's your team?

Well, I've got two. The Calgary Flames, my hometown team. But because we didn't always have a team Till, you know, 1980 here, I'm a Boston Bruins fan as well.

Okay.

Yeah.

Ever get to the games or.

Yes. Yeah. Not as often now as I used to, but that's a by choice thing. I like watching them on TV and not spending $12 for a draft beer.

Yeah. I mean, yeah, the prices at concession stands have just gone up and up, haven't they?

Yes.

Anyway, that's the distraction. I could talk about hockey for a while. I want to go back and talk about some of those blind spots a little bit more and dive deeper into some of the mistakes building company owners are making that could be affecting the sellable value of their business. Can you share any more insights on that?

Sure. In no particular order. I'll always start with the owner's trap. The owner's trap is that being so integral to the day to day operation of the business that you are a main asset of the business. So somebody isn't going to want to come in and pay premium dollar for your business if you're the asset that's required for it to run. So there's that. Now from that, the procedures and systems that you have in place in your business so that the business runs and the people can be interchangeable. That's a key. It starts with a great procedural manual. Every job should have a complete set of rules, if you will. Every aspect of that job should be covered so that if somebody isn't there or somebody quits Somebody new in, a new hire comes in that, that is in place for them. You do have to train people, but you don't need to have to answer every question they have every day. So hopefully you've got a great set of systems and procedures in place. Another one that might not seem like a big deal, but a lot of owners don't pay themselves a market based wage and they need to do that. That needs to, you should be paying yourself a market based wage and you should be paying your employees a market based wage. A new owner that comes in is going to need to hire people to do that. And the job market is pretty demanding. It demands that people be paid properly. So you need to do that. And from the standpoint of not paying yourself and then waiting till the year end and maybe get a dividend out all those profits you're supposed to have. That leads us to another issue. It's profitability. What are your margins? You need to really hone in on your margins and make sure that you're running a scalable, profitable business that can continue to grow. Buyers don't want to buy a business that is stalled in its growth. Right. They want, they want to buy a business that can continue to grow. And so how can a business continue to grow? It's having a great marketing system in place, that your sales process follows your marketing, that you've got all your financial management in place and it's all trackable daily. Those all matter, right? How your marketing and sales can be tracked through a CRM system. When you have that all in place, a buyer knows exactly what's going on in the business. They're able to look at it and say, this has been in place for five years now. It's, it's running on autopilot. We've just got to make sure that we just, we keep doing that. Those are all things that add such great value to a business. And if somebody comes to buy your business and they say, okay, so how much business did you last year? We did this much revenue on this, this many jobs. What are you going to do next year? Oh, I don't know, maybe we'll get some referrals. Yeah, you know, people are just going to say, nope, I can't, I can't buy this business because it's a hope and a prayer. It's not systemized. So systems and data make things predictable and your revenue is predictable. And that's what a buyer wants going back.

So why is it so important to pay a market salary to the founder or the or the owner of the business. I guess some, some people out there might be thinking, you know what, I'm happy to pay myself a bit less to try and grow the business or you know, help other people out or pay my, my staff first. And you know, a lot of different things like that. So why is that so important?

Well, if I look at it purely from the standpoint of somebody coming in and buying the business, they're, well, if they want to run it themselves, maybe they want to pay themselves a market based wage, but chances are they're going to want to have somebody else run it and a general manager. They need to pay that person who's going to run the business. They need to pay them a real wage. You know what that is based on? It's really easy to say, I don't really care. I won't take the, you know, I won't pay myself a salary. I'll, I'll make sure that everybody else is making a salary. But that's in my mind that's wrong thinking you should build your business so that it, everybody's making and getting paid a proper wage. You shouldn't have to rob yourself to pay somebody else. You're in my mind that's not thinking the right way about growing your business. And then, you know, there's tax issues around that too. You know, if here we have the Canada Revenue Agency, if they look and you're constantly taking a salary of $20,000 a year, the lowest tax bracket, they might start to ask questions and they might say, okay, well you know, what are you doing? Are you pulling money out in dividends? You don't want the tax man sniffing around. In my book, I say one of the blind spots is around that pay yourself a market based wage and you should want your tax bill to increase every year because that means that you're making more money every year. Think of it that way. Don't be afraid of to pay your taxes. Don't, you know, play tricky games that your accountant might say, you know, go buy something at the end of the year here, some equipment or something so that you don't have to pay as big of a tax bill. Those are just games and the buyer of your business isn't interested in games. I can't stress that enough. I've been a buyer. If we, if we sensed any of that going on like we're, we would have been out, you know, and if we were out, you know, we weren't alone. Right? The other buyers were too.

It's a very interesting Way to look at it, isn't it? Like you need to look at it through the buyer's eyes compared to your own eyes, which is a big mindset shift.

Yeah. And it is. And somebody, you know, might say, well, you know, my son or my daughter is just going to take the building business over anyway. Well, don't you want better than that for your son or your daughter or your. Your nephew or niece? You want them to have and be paid a proper wage so that they can, you know, grow their families and do the things they want to do. So you can't just be looking at it as from solely. This is how I think and this is how I feel. Because you'll be all alone at the end of the business life. If you're thinking like that, you really will. And, you know, I don't think that any of us want to be there. We want that business to survive. We want you, me, talking to a business owner. I want you to be able to realize a great retirement for the risk that you took on and all the hard work you put in and all the headaches that you had along the way. There's a light at the end of all of that, and you deserve to walk away and go and spend your retirement years the way you want to spend them. You know, Wilk, I could say one more thing. It's really interesting. MassMutual did a study, probably seven years ago now, 9,000 business owners, and they asked, you know, about retirement, about your succession. Have you planned, have you done this? And 10%. So 900 business owners said they never intend to sell. And I kind of looked at it and said, okay, so there's 900 people out there that have found the secret to everlasting life. Or what exactly are we talking about when you say I'm never going to sell? You know, the reality is you're going to sell one way or the other. So what are you going to leave behind?

What I'm trying to figure out here is how much data do you need to create a valuable sellable asset? So say, for example, you're in a position where you haven't been paying yourself a market wage. You haven't really got all of the ducks lined up, and you're making some of those mistakes that you mentioned. Is it two years at five years that you need to really buckle down and get all your systems in place so that a potential buyer can see a Runway of, you know, two years into the future? What. What, like, time frames are you working towards?

Yeah. So I would say you know, to varying degrees. If you have none of that, then you really are going to have to buckle down. You're going to have to say, okay, you know, and I can't give you an exact timeline, but that sounds to me like almost a five year, you know, we got to, we got to get our, our act together. But if it's a few things that you haven't done, you know, you can make a big, big difference working, you know, with, with a coach, working with great systems. You can make a huge difference in 18 months to two years where you've, you've, now what you've really done is formalized it. You may have been doing all this, but you weren't keeping the data. But you have financials, you have your, you know, you, you have things you've been doing. It's just a question of getting it all into a workable system that, that is documented, I guess is the best way to say it. Right. Data is so important to the business. Building business owner should have their data in front of them at all times. It allows you to make great decisions on opportunities. It allows you to see any threats that might be coming your way. So data is very important. It's important to the business owner. And as much data as you have, when somebody comes to buy your business, the better off you're going to be.

Well, it makes it a much more compelling conversation if a buyer can sit down and they see all of your numbers and there's nowhere to hide. It's like, this is how much it's worth, you know?

Yep. And that makes the conversation much easier to have because, you know, as I said, sitting across from people. And it wasn't just that one couple. It was many people that all thought their business was worth quite a bit more than it was. The reason for that is there wasn't really. They didn't have necessarily a benchmark that they could, could go by. Well, what the APB does, we work with all of our members and clients on benchmarks. We have specific benchmarks in place and that have been proven time and again with our most successful clients. Those very benchmarks are the types of benchmarks that a buyer's going to be looking for. You know, how did you, you know, what kind of gross profit margins? What's your net margin? You know, what, even on your lead flow that comes in, how many of those do you close? How long does it take you to take a lead that comes into your system to a building contract? How many construction slots do you have? A year and do you have, you know, you have three people competing for one slot. Those things they, that interests a buyer in a big way.

Yeah, it's a great way to look at it. What can a building company owner then do to get started and when should they get started on all this stuff?

So the time to start is as early as you possibly can. So if you didn't start the day you started your business, putting, you know, systems, repeatable systems in place and the right kind of marketing and all of those things, if you didn't have them in place when you started, and you probably didn't, most people don't. But the sooner you can, the better off you'll be. And so I would say just, you know, don't be afraid. Don't say, oh, it's too late to do that. As we all know that procrastination is, is just, it's, it's the killer of businesses. And I'm reminded of a story, a friend of mine, I was at his swearing in, he became a lawyer and he was 42. And the judge that was swearing him in congratulated him on, you know, later in life becoming a lawyer. And his response was, well, my mom said to me when I told her I thought I was too old to go back to law school that because I'd be 42 by the time I graduated, she said, well, you're going to turn 42 anyway, so you might as well just get at it. You know, what if you're a builder and you're saying, you know, I'm 55 and I haven't put any of this in place and, you know, I'm going to work till I'm 65. It's too late. No, it's not. It's not. It's never too late. Number one, don't even worry about, if you, about selling it at that point. You just want to make your, your business more enjoyable for you and for everybody else and you want to start spending time with your family and you want to start doing those things, you know, that, that free you up. And it is a very freeing process to, you know, start to work with a coach who's going to hold you accountable and you will see results. There's. If you implement the right things at the right time in the right order and you're working with the right person that's holding you accountable to it in a proven way, you'll see those results.

Yeah, really powerful stuff. And I'm sure there's a lot of people out there that are excited about the thought of, you know, creating something they can sell and also creating more time for themselves to spend with their family or go on holidays or whatever it is that they want to do with their life.

Right. You know, I don't want to sound morbid, but do we want. On our gravestone, do we want to say he had $5 million in the bank, or do we want to say great husband, father, you know, wife, mother, you know, what do you want out of life? Right. And if it's, you know, best surfer in, you know, on the Gold Coast. Best amateur surfer on the Gold coast, fantastic. Certainly not, you know, $5 million in the bank. No, no, that's not. That's not a life well lived in my books.

Very good. Well, Rick, thanks so much for coming on the podcast today. I think you've provided a ton of value on creating a sellable building company and all of the things that a building company owner would need to do to start thinking about this way of either, you know, creating more leverage for themselves or working with a potential buyer at some point in the future. Is there any further advice you'd like to provide builders before we wrap things up?

Well, I guess what I love to say is that as building owners, custom home building owners, you've got a real opportunity to, you know, be a member of the APB and, you know, hopefully work with a coach at the apb. It's industry specific, and it's why I ended up here. And you just understand how lucky you are that you've got, you know, this professional organization that has all of these tools and systems in place for you. They're. They're available to you and they're industry specific. You know, it's not a cookie cutter coaching program or a cookie cutter. Something that, you know, works for restaurants as well as it works for bakeries or whatever. This is specific to our industry. And I just. Yeah. Avail yourself of all it has to offer.

Yeah. And as you said before, and literally just follow the systems that are there, the systems and processes that are available to our members and hold yourself accountable. Get a coach to hold yourself accountable, and you can create something which is sellable in the future for a much bigger sum than you probably even imagine.

Yeah, I couldn't agree more. And it's my pleasure to be able to work with building owners to create that for themselves.

Awesome. Well, thanks, Rick. Let's wrap it up. But thank you so much for coming on Professional Builders Secrets today.

Thank you.

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