Linda Ruffenach With Execuity

Foreign from the Business Radioact studios in Atlanta, Georgia, it's time for High Velocity Radio.

Lee Kanter here another episode of High Velocity Radio and this is going to be a good one. Today on the show we have Linda Rufenac and she is with Executy. Welcome Linda.

Thank you. I'm excited to be here today.

I am so excited to learn what you're up to. Tell us about your firm. How you serving folks?

So we actually are a firm that focuses on helping small business owners scale grow and navigate major transitions in their business that could be reinventing themselves, you know, getting investment into their organization or for many of them it's transitioning out of their business.

So what's your backstory? How'd you get involved in this line of work?

Well, it's funny, I spent 20 years at a company that when I started was just a mere startup with 15 employees and over a 19 year period we grew that from a 15 person operation to over 3,000, had 11 locations in four different countries. And through that journey I ran operations most of the time, was CFO for a short stint and then spent the last few years as CEO. And in that role of CEO I really discovered what it was like to be lonely at the top. Even though I'd been there for so many years and had all my friends and peers surrounding me, it was just a very different role. And when I sought outside help, what I found was individuals that would either follow a cookie cutter approach or ones that wanted to tell me what to do versus advise me on what to do or help me discover the answers myself. So when I left there, I decided I'm going to be the role that I couldn't find. And that's kind of how executy got started.

Now when you started, how did you begin the journey of kind of attracting clients to you? How did you get the word out to let people know you know, what you did and how you can help?

Well, here was my first lesson in the whole deal. I did not do enough networking when I was CEO of the prior company. A lot of my network was within my clients or within the the business that I was in. And after being in it was a customer care marketing business and I'd been that in for a long time. And anybody that spent a long time in the customer business knows that it's a 24 by 7 operation and I was kind of tired. I needed to get away from that. So I really had to start hitting hard and start building my network. A lot of that was here In I'm based in Louisville, Kentucky, but I started to have to build network out beyond there. And over the years I've kind of created a bit of a following. And, and so I actually do presentations and speaking engagements all over the US now. And that's kind of how I been able to gain clients today.

And what organizations hire you to speak. What's your kind of keynote on?

Well, I kind of got two messages out there. So the where some of it started out, I actually have done some work in the bourbon industry. Being from Kentucky, you know, I began a group of women speaking and hosting events related around Bourbon. Out of that, I wrote a book called how to be a Bourbon Badass. And so that introduced me into giving some presentations on that very topic. But given my business background, one of the analogies that I found was a lot of things in the bourbon industry crossed over into the business industry and a lot of really great lessons came out of that. And so that's, that's also another topic I spend time talking on is a lot on the business side of it. And today I spent a lot of time talking about transition planning. And a lot of that is in front of women groups such as Women's Presidents Organization, nava, the national association of Women Business Owners, wfs, the Women's Financial and Insurance Services. But I also work with family business centers such as Zagarian center up at University of Cincinnati, Cincinnati, and the one here at UofL. All of it's around helping business owners and introducing them to the things they can do now and in the future to help increase the value of their business.

Now you mentioned when you were the CEO of that organization prior to your current adventure, that you hadn't kind of invested the time in the networking as much, you know, in hindsight that you maybe would have made a faster transition. Is that the same for your clients that they have to really invest some time into, like who that person is that's going to buy their business or attract the people that are the potential buyers that at some point they have to kind of build a bigger network?

Well, one of the things that I found a lot of business owners struggling with is who their customer really is and really understanding their Persona. And what I mean by Persona is who is that buyer? What are the influences they have inside and outside the role that they have within when it comes to making that, becoming that decision maker, making the decision to buy from you, really looking at the wants, needs and fears of those individuals and discovering who those individuals are and then from there figuring out where did they live, where do they congregate? How do you connect into that and really start focusing your networking in those areas? The other thing is looking at those common connections. You know, part of my network over the last couple of years, especially since, you know, we went through the pandemic, it's been much easier to reach out to people than before is trying to find people that I do have something in common with. So, for instance, I'm a certified exit planning advisor. So one of the things I did is I reached out to certified exit Planning advisors on LinkedIn just to make that connection. I've done the same thing with Navo. I've also done things with same thing with the we bank, which is the women Certified women business enterprise organization, and making those connections and then not approaching it from a sales perspective, but just approaching it from a relationship standpoint of, you know, how do I get to know you and how do you get to know me type thing.

So you didn't look at all of those folks as competitors. You looked at them as kind of potential partners or referral sources or just people that would be beneficial to like kind of a win win in your network and theirs.

Exactly. You know, that kind of comes back to my second lesson that I learned is that, you know, when I came out, I was kind of insulated from the standpoint of I was afraid somebody else was going to do what I was going to do or that if I explained it to too many people or got too close to other consultants, that they were going to take my business or they're going to replicate my ideas. But the one thing I came to a conclusion is that I'm the only one that can do what I do. Even though there's others that offer have similar offerings and they may be doing exit planning, they may be helping do business coaching and advising. I'm the only one that can do it the way I do it. And I think that's one of the places that I had to get to, as well as the fact that there's more power when you start to support each other. That was a key lesson I learned from the bourbon industry, which is they truly embrace the philosophy of All Boats Rise. Where it was such an anomaly to me to where I discovered that, like take a two competing distilleries that are right down the road from each other. If one of them has a breakdown in their equipment, they can actually call down the street and ask the guy down the road if they can borrow something so that can keep their production up totally Strange to me coming from that competitive business world, but it was all built upon a philosophy of All Boats Rise. Their mindset is that if I convince one person that they like bourbon, then that's, that's a customer for me. But then the guy down the street also sees it as a potential customer for them as well. So once embracing that, it really is, you know, people ask, who's my competition? I don't know that I have competition per se. It's about figuring out how do we support each other, and I might be the right fit for you, but that other person might be a better fit.

Well, All Boats Rise sounds like a good title for your next book.

We'll start working on that one.

I agree wholeheartedly. I think that it might seem counterintuitive to people that collaboration and a generous spirit is beneficial in the long run. But I think that just as a society that it's just better that people perform better. People want to work with people like you. And you're. Instead of just saying, you know, I'm out there and I do X, it's. I just keep looking for best fit clients and don't worry about anything else. And there are people where you're the best fit for. And that's all you should really care about, not worry about every single person as a prospect. Because that's, you know, not the reality of the situation. You have best fit clients and the faster you identify them and the faster they identify you, then the both of you win.

Exactly. And the one thing, the other thing that I learned along this journey is the power in saying no. Because to your point, not all clients are best for me and I'm not best for all clients. And I think that's an important part of any business is recognizing who are the right fits and who are not and saying no. Particularly when you're starting up a business or you're in that early phase and you're really trying to grow revenue and you're trying to pay all your bills, you tend to go towards saying yes to everything. And that's exactly what I did in the beginning. But what I found is it created a lot of distractions. It created me, created a lot of angst for me. And, and so I made a conscious decisions a few years ago, which is I'm going to work with those clients I can have the most impact with and that are going to enjoy being with me and I'm going to enjoy being with them. And if I'm not the right fit, then I'm going to Introduce them to somebody else in my network who I think is right.

That's. It's so much healthier, I think, and it's so much less stress in both parties. You don't want to ever have a client, you dread their call.

We've all had a few of those.

But early on, it's hard to really, you know, believe that. So. But I think in the long run, most people kind of land where you landed on this.

I hope so. I hope so. It's, you know, it's funny is it's a place of. Where you almost get this place of relief and freedom when you realize you don't have to take that on and you kind of get away from that place of desperation. And it took me a long time to get there. And, you know, I started to just really, through the process, discovered my purpose. Right. Which is that I have been given all kinds of experience and knowledge and gifts, that it's my responsibility to pay it forward. And when I lean into that, I worry less about whether the next client's going to come around, the next client's going to come, the next one that I'm supposed to help and supposed to lead, they're going to be there and I'm going to have an impact, and I do my best to have an impact on their business.

Amen to that. Now, let's talk about what it looks like from an onboarding standpoint. How early do you want to start having conversations with people about a transition? In the past, I've talked to people that say, look, the minute you start a business, you should know what that exit is or at least start planning for that. What should that person that has a business, how should they be thinking about their exit and. Or this transition? How early?

Well, I, as I tell most business owners, it's never too early to start. And to your point, that can start when you actually create your business. I will actually do little workshops for startup companies and work with startup companies and actually teach at one of the local colleges. And one of the things in the concept that I'm trying to drive home is you want to have an idea where you want to take this thing, because you're going to make a lot of decisions up front that are either going to enable your ability to do that, or it's going to put a roadblock in front of you down the road. And that's everything from the type of products and services you create to actually how you take on funding or investors or financing and those type of things. When I'm Talking to a company that's been around for a few years, and they tell me, oh, I'm not going to plan on transitioning for at least 10, 15 years. You know, one of the questions I ask them is, what are you going to do if something was to happen to you? And one of the more poignant questions I'll ask a business owner is, you know, if something had happened to you three months ago and you died suddenly, where would your business be today? And that gives a lot of people pause in the fact that, you know what, when you look at it that way, and it's not about trying to be negative, but the, the bottom line is you're going to leave your business one day no matter what, and it's either going to be under your conditions or somebody else's conditions. And I don't know about you, but I'd much rather do it under my conditions than somebod else's. And the only way to do that is you have to plan for it.

Now, when you're having these conversations with people, it sounds like kind of the life insurance conversation that people have. It's like you don't want to think about that. Like it's almost something that you know is going to happen. You know, at some point you're going to not be here anymore, but you don't want to think about that. Is it, is it kind of emotionally that same feeling for a business owner where that this is something that they don't really want to think about because it's so much their business? A lot of times is part of their identity. It's how they see themselves, how the community sees them. And it's not something that they're very easily want to give up, especially before they have to.

Well, you know, it's funny because one of the things is I point out to them when I call the five Ds, there's death, divorce, disagreement, disability, and disaster. And I think in the last couple years, we've seen how that can impact businesses left and right. So that's one perspective of it and trying to get them to see it from that side of it. But there are those business owners who don't want to think they put their tunnel vision on, you know, put their blinders on. And the way that I approach them is, you know, some of the techniques that I'll teach you is how to make your business worth more. And if you're the number one investor in your business, don't you want your investment to be worth more? And so whether you're going to take on or sell this eventually or you're going to pass it on to your kids. Nobody goes into business to go out of business. We go into business because we want to make money. We want to build something. We're trying to create a legacy for ourselves or for our children or our families or the community, whatever that might be. And if that, that feeling of I don't want to think about what could happen, but then focus on the fact that you're the biggest investor, that can shift your mindset as well, which is, you know, for many business owners, they have 70, 80% of their wealth tied up in their business. But the scary part is over 90 some percent of them have no idea what it's wor. And when I learned that stat, I was astounded. And then you think about it, that there was another survey done that three out of four business owners regret selling their business one year later. And the reason is, one, they didn't get the price that they thought they wanted and deserved, and two, they had no plans for what they were going to do afterwards. So the earlier you start to think about these things, the higher the likelihood you're going to get out of it what you want. And you also protect the legacy that you want to create for, you know, for yourself, your family, community, and all of those things.

So when you're working with somebody is one of the first steps doing some type of valuation so that you have some number, some baseline that you're like, okay, this is where we are today. This is where down the road you want to get to one way or another, let's at least kind of see where we're at today. It's like when you go to the doctor, they take your blood pressure so they have something to compare it to, you know, a year from now, five years from now, to see how you're doing?

Exactly. And that is one of the places that we'll start actually do two types of evaluations. One is a purely financial evaluation. It looks at your income statement, your balance sheet, all of those things to come back to what really is your business worth from a financial standpoint? And there's a lot of factors that go into that, including what type of business you are, what recent multiples have taken place in that. But the second type I do is more of a subjective assessment, which is going through a series of questions to identify where you are in alignment to some of the key value drivers that are out there. It's built on John Warlow's built to sell Method, which is, you know, there's eight key drivers in your business, and when you understand those drivers and understand where you are in alignment with that, then you can start to build strategies that will make your business worth more, but also makes your business stronger and more equipped to handle downturns and recessions and all those things that none of us plan on and never, never want to think about. But you're in a much better position had you not thought about it and planned for it.

Now, when you do this evaluation, evaluation, does that number. For the most part, are they your clients? Like, wow, that's more than I thought, or, wow, that's less than I thought? Like, where do they typically fall?

I will say there's been a few that have been wow, but the majority is, oh, wow, I didn't know that's what it was worth more. Like, I thought it was worth more. Because we hear anecdotal stories about others out there selling their business for, you know, four or five times the revenue that they generated. Or you're talking to the. To the individual down the street and she sold her business for all this money. And you kind of look at. You're like, well, I think my business is stronger than hers. And, you know, I run my business far better. If she can do it, then I can do it. But the reality is there's so many factors that go into that. It's. It's not always a good comparison. When somebody says, I sold it for this, you should be able to sell it for that. So there's a reality check to it. I think the bigger thing that people underestimate is how much they have to sell their business for in order to retire, that they don't realize that if I sell my business for 5 million, I may only be walking away with 3.2. And we get those numbers in our head and think, wow, I can live off of 5 million, or I can live off a million and a half. But when you start taking out fees and legal expenses and, you know, retention, things that you want to play to your leadership team and all the legal. All of those things go into it that you're not walking away with a whole lot. Oh, and by the way, taxes. You have to pay taxes and all of that, and people realizing, I need to sell my business for a lot more than I thought it would, thought I would, and there's some big steps I have to take to get there. And these aren't the kind of steps you can make in 18 months. These are the kinds of strategic decisions that take three to five years to implement.

So is there any advice you can give somebody today? Is there anything actionable today that a person could do to increase their value of their business? Are there some kind of low hanging fruit that you find in a lot of businesses?

Well, there's two. Two of the biggest factors that impact the value of the business is recurring revenue versus reoccurring revenue. And let me explain the difference between that. So you've got a customer who comes back and buys from you on a regular basis. But there's no contractual obligation, there's no monthly, quarterly, annual fee that they're paying to you. It's just, you know, project by project or they may even be paying you an annual amount. But you have to initiate a renewal in, in the process. That's recurring business. I'm sorry, I'm going to get a mix up. Reoccurring, that's reoccurring, sorry, reoccurring business. What you want is recurring business which is that predictable revenue that's coming in every month and that comes from subscriptions, it comes from, you know, having longer term agreements. It's about having auto renewals, it's about, you know, where it's consistent, predictable revenue. And when an outside investor comes to either look to acquire you or invest in your business, they're looking for predictable income that they have high levels of confidence in that are either going to grow or at the very least is going to stay around after you go. And so that recurring revenue model gives them those extra assurances. The second thing is dependency on you as an owner. You know, there's a lot of business owners that take pride in the fact that the business runs, can't run without me. I know every client by name and every client can pick up the phone and call me. And those clients know they can trust me. Well, if you really want to build a business that's worth a lot more, yes, they need to trust you. But more than anything they need to trust your business. They need to trust your team members. They don't should not need have the need to pick up the phone and call you. Because when they pick up the phone and call you, then that business is dependent upon you. And if something happens to you, then once again, I'm an outside investor. I'm somebody looking to acquire you. Or what happens if Bob or Jane go away and the businesses depend upon it? Well, they bought from Bob, they bought from Jane, now they're going to go find somebody else to buy from because it was purely dependent upon you. And that is really a place where a lot of individuals and business owners struggle is how do I peel myself away and how do I let go and how do I trust? And this isn't even just trust between letting others take place. Many times this is the biggest challenge you have in a family owned business is how do I let the next generation start taking on these relationships when I've owned them for so many years?

Yeah, the ability to delegate and have systems and processes that work without you, that seems just kind of just. They have to, you have to have that. Right. Isn't that just almost table stakes in any type of exit?

Absolutely. And it's a hard thing to do if you don't start on it. You know, it's not something if you've never really planned for that, you've not really done much around succession planning and you've been just working head down in your business and you're looking at, you know what, I'm 60 some years old, I'm ready to start pulling back a little bit or I'm getting tired and you're starting it a couple years before you want to do it. It takes a long time to get people to break dependence on you. It takes a long time for you to let go. And some of the stuff that's in your head, that tribal knowledge is difficult to transfer if you don't take the time and the effort to work with others to get that or bring people alongside you that you can mentor and grow. Because the other piece that when investors come in and look at your business, they're looking at your leadership team. There are some that are strategic that they come in and all they're buying is the technology or they're buying the customer list, all that kind of stuff. But a lot of times when investors come in and looking to acquire you, they're looking to acquire the talent and the leadership as well. And if you don't have the right talent and leadership in place, then that's also going to discount your value and that talent. Leadership also needs to have a vested interest in staying because maybe they're working for you because they like working for you and as soon as you sell this thing, they're out of there. Well, that's not going to be appealing to an investor who's wanting to come in, put their money into the business and get their money out the next few years.

So what's it look like when a firm is working with you? Is it something that is done at the beginning to put a plan into place and you Say, okay, good luck, go forth and prosper. Or is it something that you're working with them throughout, all the way through the exit and maybe onto their next adventure? Like what are your kind of, how does your relationship typically play out with a client?

So I do everything to get them ready to put it on market. I'm not a business broker. I will help them find a business broker. I will help them find somebody who, or an investment banker who can help put it out there. But that's not a role that I play. But what I do do is do everything up to that point, which is helping them get ready, helping them put their business together and start to tell their story and figure out how to tell their story in a way that's going to be the most appealing to the investors. How do you put credentials against the things that you're saying about your business? Like, my customers are really loyal. Great. How do you quantify that? Where do we get that information? You know, that my customers have a lifetime, a very high lifetime value? Well, let's quantify that. Let's figure out how we put metrics behind some of these story points that you're telling and then getting it to where once again, that it becomes an appealing business to put in front of an investment banker or a business broker who says, wow, okay, I can sell this thing and I can sell it pretty easy. And then once it's in their hands, the one thing that I will do is I will stay alongside the business owner if they want me to, to help them through that decision making process. Because selling your business is far more than just getting the right price for it. It's about finding that right buyer who is going to fit for you and fit for the legacy you're wanting to create. For some, it's all about the financial transaction. And there's absolutely nothing wrong with that. You built this thing to sell it. And so I'm going to sell it for the most that I can sell it for. But there's others who have had their business for 30 years and their team is their family. And so making those decisions about a sale is very different for them. They, when they come to selling it, they want to think about what's the impact on the team I have, what's the impact on the community. You know, I had one recent gentleman who we worked really hard, we worked with a broker. We actually got the price he wanted for his business from the people that he wanted to make the offer. And then when it came down to it, he stepped back and realized he was taking all kinds of revenue and money and taxes out outside of the community that he lived in. And he changed his mind. He's like, I can't do this. I can't do it to my community. And so he chose to stick with it. And now we're looking at other alternatives for him. But there's a lot that goes in that decision making way beyond just the money.

Right. And it's, I guess, at those points of inflection where it's becoming real, then you understand the ramifications of what that looks like and how it's going to impact others. And the sooner you kind of go through at least that process in your head, then the more effectively and efficiently you can make that transition.

Absolutely.

So if somebody wants to learn more about your work, your team, and how to get on your calendar, is there a website?

Yeah, there is. So you can go to execuity.com it's E, X, E, C U, I, T, Y. Or if you want to set up 30 minutes to chat, it's really easy. You can go to consult Linda.com and you get direct access into my calendar and set up 30 minutes. And I always love chatting with any business owner out there. And if I can't help you, I'm going to point you in a direction to somebody who can.

Good stuff. Well, Linda, thank you so much for sharing your story today. You're doing such important work, and we appreciate you.

Thank you, Lee. I appreciate you having me on.

All right, this is Lee Kantor. We'll see you all next time on High Velocity Radio.