Ed Scott founder of Resolve on building a better marketplace to buy and sell small & medium businesses.

[00:00:00] Welcome into another edition of Small Business Bantar.

[00:00:03] Today, really pleased to have you in Ed Scott,

[00:00:06] who is the founder of Resolve,

[00:00:08] which is a small, medium enterprise marketplace,

[00:00:11] somewhere where you go to buy and sell businesses.

[00:00:14] So Ed, thank you so much for taking time to come in

[00:00:18] and talk to us today about your journey as a founder

[00:00:22] and then, and most importantly,

[00:00:24] about the sale and acquisition of small businesses,

[00:00:28] which you're comfortable with all that Ed, it's a bit of a mouthful. Looking forward to it. It's aolve, ultimately, when searching for a small business, particularly a manufacturing business or a rail servicing business. And ultimately bought thirds of a Chinese restaurant in Melbourne

[00:03:03] in the city there and men to others, that was ultimately neither of them would hire conviction sellers that you know they like the idea of it. They just couldn't let go of that they be and I couldn't blame them but you know I gave myself six months to find a small business to buy and which I thought would be plenty of time. It shows my

[00:04:22] level of ignorance and then yeah it obviously wasn't plenty of time and it and continue to do other things, including being a part owner or a director of a private business. But it was enough for you to want to start a marketplace. So can you tell us about what resolve.com.au is right today? What its primary function is and what we're hoping to take resolve?

[00:05:40] Yeah, sure.

[00:05:42] So resolve's primary function is to them, for example. And then, so a teaser is, yeah, that's like a one page summary of a business opportunity, essentially. Yeah, that's right. Some people might call it a light, I am light, or a teaser one

[00:07:03] pager, exec summary, but essentially it should tell you a little more than multiply that by the average business broker fee and aggregate that poor sum up that quantum transaction, that poor transaction fees is the largest across micro businesses, institutional and middle market. And so that's the market we play in. But it's also really interesting because you find some hidden gems that, for example,

[00:08:25] relatively recently we had, or about six months ago we had a business come through the pipeline, What do you think is wrong with the way it's done currently? Because there's a couple of things you mentioned. You've come in, you started a few years ago, and there's a number of existing large players. I wonder, your motivations, how you see you can do it differently. And then let's start with that, because it's such a, it's such, you know, for the owner

[00:09:41] of a business worth between $1 and $40 million,, whether it's starting out or by their own business. So be in a job and maybe buy a job. Yeah, that's right. Yeah, exactly. And so they do a great job. I mean they're enormous. They're probably couldn't. I wouldn't have a clue that I guess 20,000 listings that anyone's on.

[00:11:02] Yeah, I think they do about that. Maybe a private business, almost a private business network. Similar to yellow pages for example. And so whether that is,

[00:12:24] you know, you might be looking to find a sale easy and much to contrast them to my own of you this morning or you know what I'm saying this morning break down the binoculars and don't use big words because the buyer market should be anyone that's that's got a business or a

[00:13:43] Want to invest the dollar whether they're looking at a real estate

[00:13:48] You know residential real estate or ETFs or private that, you know where do I see us? I've like resolved to be in a real estate of Conveyor or

[00:15:03] you know car sales or domain of the business broken market is so hard because no one knows where to find buyers or sellers. This is not the single place you can look for an industry or for sector or for size or location. And so what we're simply trying to do at its core is take a little bit of money from each listing in the form of a listing fee, pull that together, fund marketing to screen

[00:16:24] from the rafters so that potential They know that exit planning and selling is, you know, the older they get, the more they

[00:17:44] need to think about it, a lot of bringing together and more closely the buyers and sellers of businesses. Totally, just on that. I totally agree with everything you've said. And that's actually been a learning. So we've been doing this more than six years.

[00:19:01] And how old is it started before it should have started?

[00:19:05] I can answer that because, but that there is a small number of buyers. And so, until there's more buyers, vendors will somewhat and greatly assume that their business needs to be perfect to put up for sale. And the preparation of getting it ready for sale is a future sale problem. But then ultimately a potential recession looms or interest rates go up. And then they think, well, shit, if I want to sell on the next five years,

[00:20:21] I need to get ahead of this title, I have to do it now.

[00:20:24] And suddenly, they might come across some complications. a bit like selling a house, tidy it up and when I'm ready I'll put it on and it's just not like that. And that's the opportunity for yourself and for me as a broker to get to more owners and talk about creating options. This is very much about getting a deeper understanding of what your business really might be worth

[00:21:41] is the timing good enough.

[00:21:42] Are there buyers for your industry?

[00:21:45] There's a whole lot of things don't of the 1.5. So that's the addressable market businesses with employees. Of course it's not going from 1 to addressable market in an average year. Now, as we reference already, that there's a lot more to their business than just the wealth tied up in it. It is purpose, it is legacy, it is having you know a business where you have your good days and your bad days but it kind of underpins your life for 20, 30, 40, 50 years.

[00:25:43] Along with your kids it's your heartbeat. Are you clear about your team? You want them to continue on and serve as humans. And so consumer behavior economics is the key point to understanding whether the business has a future irrespective of generative AI or other potential disruptive forces. And so if you're a buyer, am I buying a house in a cul-de-sac, north-facing backyard, close to public transport, what are the equivalents for businesses?

[00:27:01] Is it an industry that you're interested in or you previously got experience in?

[00:27:05] Is it try to minimize your blind spots? paper one there. They're just sort of like out there obscure just doing their thing, not perfect. Most of them we can go in as advisors and say we should do this and that, but they're a running start and there's a lot of, there's a lot of buying something vis-a-vis starting up, right? You've been't know who to turn to. I'm quite sure what the process is, who to trust. What's your kind of plea to them to help kind of business. But, yeah, it's all very sensitive area. It's totally right. I'd encourage you to add to one of your research avenues, resolve.com.au. You know,

[00:31:02] add resolve, you can on the home page is that to the canvas across the strategic buyer audience. What does that mean? Well, who are the people that are likely to value your business the highest because they can extract value in ways that others can't? And so that's what we specialize in. And there's a whole lot of fancy words or long words there, but you don't go to your

[00:32:22] neighbour.

[00:32:23] Oh, you know, your neighbour might be able to pay more for your house than what someone Some brokers might not have the resources because they're spending all their time manually responding to people and sending out NDAs or it's just too expensive to reach these people in far stretches. For example, we marketed it in conditioning, retailing and services business. So they sell air conditioning units and then service them.

[00:33:40] We sell that in three, oh, we didn't sell it.

[00:33:42] We marketed it in a buyer and choir,

[00:33:44] the purchase and choir within three days

[00:33:45] of the business being published.

[00:34:43] It doesn't make any difference. Because then it's a qualifying procedure or process and if somebody does inquire, you

[00:34:51] get the opportunity whether you're the owner and not ideally you have an advisor but it

[00:34:55] could be an owner doing themselves.

[00:34:57] It could be an advisor and you have the opportunity.

[00:34:59] So, well, who are you?

[00:35:00] Tell me a little bit about yourself.

[00:35:03] This is in a more effective, fully functioning marketplace. But, you know, I'm a 45% shareholder of a manufacturing business that makes brick saws and brick tools and that we're very proud of. And, you know, were we ever sell it? It's not on the cards at all, but it would be scary because we really care about the team and what I don't want to supply us to shorten the terms or whatever it might be.

[00:36:22] Ultimately, no one's going to find out if they mark a business on result.

[00:36:26] Yeah, yeah. the minds of a non-elisting inn, do you have a sense of how long, you talked about a three-day sale there, do you have a sense of how long should or typically takes to get reasonably well prepared and then to go on market and find out whether their buyer's out there? So just the time frame from go to woe.

[00:37:41] Yeah, there's not one recipe fits months, but being realistic, you're not going to come in every day and prepare for a sale because this is the task of an organised person. And let's face it that

[00:39:01] when you're a business owner, you can have, preceding that is a period, there was at least two or three, there was just looking at your business from the point of view of a buyer, what can you change to make it easier to sell and finding a good advisor, because the advisor that takes you

[00:40:20] through the sale of a $2, $3, $5, some buyers might buy business for two or two and a half or three times even though the business it's very easy. This is what I think as a business owner is well I just run my business for number three years and I can sell it for a dollar and I'm better off. Yeah but getting off the throne is the hardest thing to do and so

[00:41:42] putting a line in the sand is a good idea and the thought of shutting down your business it's easy So you always have to take what they say with the grant itself. And I'm certainly no exception to that at all. I approve the rule probably. So we're currently going through a capital race to continue funding our growth and accelerate our growth. The business will be positively have positive cash flow in six

[00:43:02] months or so maybe sooner.

[00:43:04] So we're in a good trajectory.

[00:43:05] It's just about what holiday when it's really or a three-month holiday because everyone knows if you're a business owner you can't take a holiday even if you're sitting on the beach at Fiji you know you're not relaxed. So that's where we want to go is to invest in extending the hopper on both the buyers and the sellers sides so that more people can start to dip a toe into the market whether they're looking to buy a seller business and

[00:44:23] I suppose the other significant share of the manufacturing business who's an inspiration. We've got different skill sets and I've continually been impressed and amazed at what he thinks and what he's

[00:45:42] achieved. So it's, you know, I more important these businesses are. And we have seen and continue to see great developments in terms of employee ownership, cooperatives and mutuals as different ownership as structures. But ultimately, that hope that hopper fills up both ends for you. So we get

[00:47:01] more owners asking what I need to do and. Businesses that give more away than less and earlier rather than later to employees so that everyone's aligned. And in terms of incentive do really well and grow faster. And yeah, let's just all get after it. Get after it, hey, do you just want to, if people want to contact you, where would they

[00:48:20] go find you? And also give us a website name just to close this out please.

[00:48:26] Thanks so much. Well, I've enjoyed chatting. It's been great. Thanks, Michael.