Building a Profitable Business That's Ready to Sell with Joe Valley | The Food Blogger Pro Podcast

Joe, welcome to the podcast.

Good to be here. Thank you for having me.

Yeah. So you are a voice that I have. Sometimes people will say this. I will do a podcast of them, and they're like, hey, it's like having a conversation because I've listened to you. I got to say that's you, because I've listened to the Quiet Light podcast. So talk a little bit. About what? Quiet Light is the background there, and then we can talk about this book. For anybody watching the video, I'm holding it. Extrapreneur's Playbook. But what is Quiet Light and what do you do day to day?

Well, first of all, I appreciate that you feel like you know me, even though we've never actually talked like this before, because I feel the same because you've been on our podcast with Mark hosting, and he and I talked about you and Food Blogger Pro for years. So it's kind of weird. This world that we live in, sometimes we feel like we know each other. Even though I had no idea what you look like, I had no idea what the sound of your voice was and that kind of stuff. So it's pretty cool. Pretty cool. Quiet Light is an online business brokerage firm specializing in online sell side only. And I would dare say, bjork, that we are the leading or one of the leading brands selling online business brokerages in the world.

Mm. It's interesting. I remember sitting at my computer like, six or seven years ago and browsing Twitter, and I was like, I came across some Quiet Light stuff, and I was like, oh, here's the CEO, Mark.

Yeah.

Looked up and I was like, wait, St. Paul, Minnesota. Like, he's. He's like, we could be neighbors. And I remember this moment of like, oh, this is so awesome. And I shot him an email or something like that, connected with him. Um, and now you are a partner at Quiet Light. That happened. You said 2018.

That came out, I think 2018. Yeah. I joined the company after I sold my own business and through Quiet Light Joint. Yeah, I saw this. Through Quiet Light. Yeah.

Yep. Nice. Um, and it's. We were talking about the transition of Quiet Light going from, you know, selling significant businesses, hundreds of thousands of dollars. And I just checked the other day, and it's like, now, like, multiple millions of dollars. These businesses that you're selling are these businesses that, like, for people who listen to this podcast, Food Blogger Pro Podcast, are these businesses, like, we're working on that we could build and sell these businesses someday? What kind of businesses is Quiet Light sell and how Realistic, is it, for a food blog or food creator to build a business that they eventually sell?

Yeah, absolutely. The audience members are potential clients of Quiet Light, or the material that we share, which we. We give everything away for free because we educate. We. We consider ourselves in many ways just an education firm. And we educate and help, help, help, and then that eventually grows our business as well, because people choose us to do business with and help them exit their business. But absolutely. A client of mine, Victor, his first business that he sold was a. A content site. It wasn't specific to food, but he sold it for, like, $7,000. Bjork. And then, you know, 18 that he sold for 20,000, climbing up the food chain. And then he didn't sell those first two through us, but then he sold one through Amanda here on the team for about 220,000. And then he came back again another 24 months later. And this is one that he'd been working on for a while.

Sure.

And we listed it for $5 million, and we actually sold it for just under 9 million because of the growth of the company and things of that nature. But, yeah, no doubt we prefer working with people when they're not at the end of their business life cycle, but more in the middle so that we can help make sure they're doing the things that are going to help get them maximum value when they eventually exit.

Yeah. Which is one of the things that I love. It's one of the reasons why I love listening to the Quiet Light podcast is because, you know, we don't. I think some people come in and they operate as. As people who say, you know, I'm going to take this, and I know in three, four, five years, I want to sell this. And I think at first glance, you'd think Extrapreneur's playbook, those are people who are coming in, they say, I want to buy something, build it, or I want to start something, build it, and then sell it. But what about people who are like, wait, this is something that I am building, and I want to build it forever? I'm people who would say, like, I'm not an exitpreneur. I'm a business owner, and I'm building my thing, and I just want to continue to run that forever. Is it. Do you have to opt in to be an exopreneur? What about people who are a little bit cautious about it? And really, what is an exitpreneur?

Well, define forever.

Right.

Let's do that first. I'm gonna run this forever. It's not something that exists in our lives. Right. We're not gonna live forever.

Yeah.

So eventually you are going to move on from your business or your business is gonna move on from you. Right. You're gonna die. It's just part of life. You might get divorced. 50% of people might. You might have a falling out with your business partner. It happens, unfortunately. Or the business may get to the point where it's a grind because it's gotten so big and now you have to hire all sorts of people, and that's just not your thing. It's outgrown what fills your cup and makes you happy. And then you think like I did back in 2010. I woke up one day and decided, oh, man, I got. I want to sell this business. I'm out.

Yeah. Yeah.

So, you know, an exitpreneur is somebody that has done it already. They're an entrepreneur, and they've sold their business, and now they understand that the most of the value you get from the business does come the day that you sell it. And so they're running the business with a mindset of. The reality is that at some point, I am going to exit this business. It may be to my children.

Sure.

But I'm still going to run this business the best I can to build a great business for a great buyer to take over at a great price, even if that is my children. Or like the email I got today where somebody is hoping to sell his shares to his business partner. Sure. It will help you, first and foremost. Well, the book, the extrapreneur mindset, I guess, if you will, will help you understand the true value of what you have.

And.

And more often than not, Bjork, it's your greatest asset in terms of your portfolio of assets.

Yeah. And it's interesting. We work with a personal finance guy, and we were putting together. He's like, we should probably be tracking your net worth. I was like, okay, yeah, that sounds good. For a long time, he used mint, and it syncs up with your bank accounts and you can do investment account. He's like, we should probably include your businesses in this. And it's like, oh, yeah, like that makes sense. Like, there's value in these things that we've created and then create a little pie chart. And it's like, oh, like, I guess our businesses are the most significant investment that we have, and we should probably treat them as such. Like, if you think about it as something that similar to an investment in a different company, like a mutual fund or a stock or like, Crypto or like a savings account. All of those are investments. But for people who are building a business, that is an investment as well. And that's one of my favorite things about books like this. Why I love listening to Quiet Life podcasts, why I love reading a book like Entrepreneurs Playbook, is because even if right now we're not in the mindset, we're not people who are like, hey, we're going to acquire, build and exit. What it does is it helps you create a business that somebody would want to buy. And usually a business that somebody would want to buy is a business that's generally better to run.

Absolutely, Absolutely. I've seen this happen so many times. And by the way, exitpreneur is a new word and it's hard to get it right when you say the name of the book, because you just said the Entrepreneur's Playbook. It's the Ex Playbook. And I just want to let people.

Know that I was looking at the title as I was saying it, but I said Entrepreneurs Playbook.

I get it, I get it. And I wrote the book, but I still bought exitpreneur.com and I was so proud of myself. Right. That doesn't make sense. Joe, you bought exitpreneur.com. i spelled it wrong. Bjork, I was so proud of myself.

When you were buying the domain.

Yeah, yeah, yeah, yeah. So it's the. The domain is now exitpreneur IO because somebody else actually owns the dot com. He only wants a quarter of a million dollars for it. Oh, well, yes. So you know, your book, I mean, your business is your greatest asset yet. You have no idea what it's really worth, and you're just running it to grow top line revenue and take some cash flow out and maybe more and more and more each year. But the real value, as you said, is tracking your net worth. And net worth is nice. On paper, it's nice. But you can't do anything with net worth. You can only do something with cash flow. So the business is producing cash flow. But my mindset was I need to write this to help people understand how to manage the value of what they have so that when they're ready to exit, they'll be prepared to make sure they do get maximum value. Because, Bjork, I've talked to thousands and thousands of entrepreneurs over the last decade, and the sad part of it is that most of them are not prepared and they don't call until they're exhausted, emotionally worn down, and just need to move on. And by that time, it's. It's. It's too late to have a great exit.

That's what I was going to ask at that point. Is it too late? And if it wasn't too late, when those people call, what would the things that they would. What would be the things that you'd tell them to do?

Yeah, often it's too late to have the exit that they want. Right. So, you know, why is that? Well, there's a story in the book because they've got a certain dollar amount in mind, Right. They're just like, okay, I'm going to sell this. And there's a story in the book. And I think on all the epic failures in the book, I changed names completely. Let's just say the guy's name is Steve, right? So he came to me and he wanted to exit his business for, I think it was $10 million. He gave me the details over the phone, and I made the mistake of saying yes because he was about to sign an engagement letter to someone else, and he's like, look, I just didn't like it here. I heard great things about you from a guy named Bjork. It wasn't you at that time. But I said, okay, let's go ahead. And I signed an engagement letter. And then, and only then, did I look at his financials, which is absolutely wrong. I shouldn't have done that.

Sure.

I should have firmed up the value of his business first. Because once I got the financials, I was on a call like this, and we're looking, and I'm, like, scrolling through it and we're talking about the numbers. And he goes, whoa, whoa, hold on, hold on. What's that figure in July? I'm like, well, that's. It says, you know, $1.3 million. She goes, there's no way I did 1.3 million in revenue. I'm like, steve, this is your P and L. You gave this. Yeah, it's wrong. So that's the first thing that most people do wrong, and that is the financials are not right. They're not clear. They're not. I can't dissect them, or they don't even use QuickBooks or zero. But in Steve's case, his $10 million exit, his goal was unachievable because he thought his discretionary earnings were much, much higher based upon his conversation with the other firm and their light view of the financials. And when I dug into them, his business, unfortunately, was only. And I say only. But in his case, it was only worth about $4 million, which was 6 million shy of his exit goal. So he couldn't exit for the goal that he wanted to, and he couldn't exit it $4 million because he had debt on the business and it wasn't enough to give him that freedom that he needed.

So at what point do you start to pay attention to that, like, get QuickBooks set up, use a bookkeeper, use a CPA. I mean, is that kind of the 101 of what that looks like to do to have your financials in order?

Yes, but let me clarify the difference between when somebody tells me, I say, who. Who's doing your books? Are you doing it? And they say, no, no, no, no, my CPA is doing it. And I immediately know that's a problem because the CPA does their books primarily for the tax returns, whereas a bookkeeper does it so that you can analyze your business and it's easy to hand the correct financials to your CPA to then file your taxes. Yeah, so there's a clear distinction in my view. A CPA is for tax mitigation, tax filing, attachment, tax mitigation purposes. A bookkeeper is simply to get your books in great shape so that you can understand the value of what you have, so that advisors can help you understand the value of what you have. And yes, so that you can give them to your CPA to file taxes. But anytime I see a CPA doing the books for somebody, generally they're. They're done on a quarterly basis. They're, you know, they're not an accrual basis. They're just. They're not, they're not, they're not right in terms of trying to exit the business.

And it's amazing how much of a difference that makes if you have a monthly rhythm of looking at the numbers in your business. We use a company called Pilot, which. It's relatively expensive, but it's an outsourced bookkeeping company. They kind of have a focus on startups. And then we work with somebody as like a fractional cfo. And that combination has been super helpful for us to see. Like, okay, on a spreadsheet, I can look at it and see, here are the trends, here are where things look month to month. This should be happening. This shouldn't be happening. Wait, why are we spending $3,000 on, you know, whatever it might be odd expense that you otherwise wouldn't have noticed. So is, is that the benefit of, like, the monthly bookkeeping is kind of like financial hygiene?

Well, yes. So we do the same Thing at quiet light. Right. Because I'm an exitpreneur and I advise people how to grow their business to make sure they're getting maximum value. So I talk the talk without walking the walk. So I'm always thinking about the eventual exit. I'm 55 years old. I'm not going to work forever. I'm not going to live forever. So sometime at some point my business is going to exit me or I'm going to exit the business. So we have the same thing. Outsourced bookkeeper, outsourced or fractional cfo. And we look at the go over the books every month in your case in that situation. And you said $3,000 of odd expenses. So the way to start thinking like an exopreneur is, is okay, my business, let's just say it's worth four times. Four times what? Four times seller's discretionary earnings, which is net income plus add backs, which is owner benefits and one time expenses. Okay. That's a lot of information right there. But you get to that point of you found a $3,000 expense that just didn't make sense and you're just blowing money, right? Well, that $3,000, if you do that in the 12 months prior to selling your business, you're not just losing. And let's say you do that every month, that's $36,000. I'm sorry, that's what's wrong with my math. $39,000 a year, right?

Sure. Yep. 12. 3.

12 times 3 is 36.

Yeah.

I do this for a living.

Yeah.

All right, so $36,000 a year is not just what you're losing. If you're just blowing through money in your business, it's actually 36,000 times four. So you're really, you know, closer to 160,000, 150. $160,000 in the loss of the list price or value of your business because you're not paying attention to the bottom line. One of the things that most people miss. Bjork, I don't know. In your business, do you, do you use credit cards for cash back money much or reward points?

Yep. We didn't for a long time and we just transitioned to doing that like year and a half ago.

Why did you transition to doing that? Because the perks and benefits or do you get the cash?

We. Yeah, cash. So did a calculation. It's like, well, we could make like, I don't remember what it was. Multiple thousands of dollars just by switching to credit cards.

Okay. Let's call it $10,000 a year? Sure. Okay. So you're not just making $10,000 a year in cash back.

You are.

That's real money in your pocket. And really what it is, it's a discount off of spending advertising, whatever it might be. And the IRS doesn't know how to tax it. So even if you're using that money going over to your personal bank account, what you want to do is put it in an add back schedule on your P and L. Because you're not just getting 10,000. Because if your business sells for four times discretionary earnings, that 10,000 adds $40,000 to the list price of the business. Because that is an owner benefit. It's a perk of running the business. And the new owner of the business is going to get that same perk when they use a credit card. So little details like that, that extraprene mindset, understanding the value of what you have and making sure that you're getting maximum value when you do eventually exit will help people reach that goal that they're setting a little sooner. Or be so comfortable and happy running. As you said, if you build a great business for a great buyer, someday you're going to enjoy running the business and you may hit that exit goal. But then say, I'm having fun and then just move the goal post.

Right. Point being with both of those is the expense isn't just the expense. Like, you shouldn't think of it as just the expense. But even if you're, even if you're not thinking of selling right away, eventually you will. And if you're thinking of your business as like, what is the value of this? The more that you are spending, the less value it's going to become. Because there's a multiple. Use four as an example. It's that kind of like a number that you use for where the market is right now. Based on.

Sure, yeah. Content sites. Yeah, Anywhere from. Let's say it depends upon the size. There's so many variables. I can't give you a multiple and have it apply everybody businesses.

Totally dangerous.

Call me that.

That was one of the things when we were saying like, how do we figure out how much this is worth? I was like, I don't know, like three to four. Like, I didn't want to be too aggressive. Where you have this idea of like, hey, it's going to be worth a lot. And then if you do, you're doing.

That with your financial advisor.

Yeah, exactly.

So this is what kills me.

Right.

And this is part of the reason I had to write the book, Bjork. Because you know Mark and I really, really well.

Yep.

But you didn't even feel comfortable saying, hey, Mark. Hey, Joe.

Yeah, yeah.

What's the. What's the value of what I have here? I'm not selling anytime soon, but I really want to know what the value is. We could say it a million times over and people still don't feel comfortable taking advantage of the service that we provide, which is, you want to know what the value of your business is. We're here to help with that. We don't talk you into anything. We want to help you. And that comes back around to us eventually. If you choose to sell and choose to work with Quiet Light, or you would be like, I had evaluation done. Mark is brilliant. I love that guy. Wow. I am so much closer to my goals. Everybody in the audience, you've got to just at least get evaluation for these guys at Quiet Life. It's what we do. But even you didn't pick up the.

Phone and call just somebody who, like, I've had lunch with many times.

So for a lot of people, they're not comfortable with that. So the, you know, the. Everything that, you know, anybody on my team would do or Mark would do is, you know, in terms of the valuation is in the book. Right. I go through the whole process. So you should get a really good understanding of the value of your business in terms of a range. I even put ranges in there, and I say they're subject to change, but you'll be able to firm up that most important thing, which is sellers discretionary earnings, with the details in the book. And then you've kind of got a blue belt. You don't have a black belt yet. Mark's got the black belt. So you should call Mark for the real expert opinion or somebody on the team. Yeah.

Yep.