Ken Matthews from Matthews Steer, leading adviser to family businesses, on his own exit after successfully growing a highly regarded financial services business.

[00:00:00] Hi, it's Michael Kerr here presenting Small Business Banter Welcome to the Small Business Banter podcast. I'm Michael Kerr your host and I'm also the founder of Kerr Capital where I work day to day with business owners

[00:00:21] The Small Business Banter podcast is built just for business owners and will be especially relevant if you're an owner looking to sell If you've been unexpectedly approached by a potential buyer or if you're an aspiring owner about to buy a new business

[00:00:37] There's a lot on the line personally and financially. It's stressful, it's emotional and it's usually new territory So to help, each episode of Small Business Banter is a discussion between me and another business owner or an experienced Small Business Advisor We talk about their experiences

[00:00:58] So what you'll get is practical real life advice, different takes on everyday problems and a renewed confidence to tackle your own business challenges So welcome in to I think Edition 142 of Small Business Banter podcast. I'll have to check on that but welcome in Ken Matthews today

[00:01:34] Thank you Michael, welcome to you The reason you and I, we've known each other for a fairly long period of time. I'm going to get you to tell your brief story in a minute

[00:01:48] But Ken is the founder of Matthew Steers which is a Malibu based or Victorian based financial services group Started as an accounting group but really broadened out much more to focus on family businesses particularly

[00:02:08] So Ken thanks for taking time to come in and chat on Small Business Banter podcast Do you want to kind of just set the scene with your brief history?

[00:02:17] It's not a brief history but you know a couple of minutes on you and Matthews Steer and then we'll delve into some of your experiences working with business owners closely to help them get set to sell

[00:02:34] And also your own exciting news of the last few years where you also went through some mergers and acquisitions and you know Really redeveloped your business as you know it's a much bigger broader financial services platform looking for your own acquisitions to grow So over to you Ken

[00:02:56] Well thank you Michael I think we first met at the O entrepreneur's organisation going back quite a few years ago And I suppose that's probably where I started was in the garage at home you know as a killer as an entrepreneur really started from scratch

[00:03:13] And then you know taking in Jeff Steer as a partner 1990 and then we had a vision to basically grow a mid-tier firm in the northwest of Melbourne Which we've done over 33 years it's now we've got 50 people four in the Philippines

[00:03:35] And as you said not just accounting and tax but we do business advisory We have financial a large private well financial planning division And we also which is interesting which is a bit different we have an innovation and grants team

[00:03:51] So we're doing R&D and export marketing and capital grants So you know even though we're an accounting firm we've actually got three PhDs working for us doing R&D clients More like your lab

[00:04:03] We've actually got a base in a lab sort of a lab at Melbourne connect in 700s forms of street part of Melbourne uni Which is fantastic

[00:04:14] So that's sort of what we where we're what our journey's been it's been a you know a great journey I wouldn't have swapped it for anything Yeah, yeah it will get into in a lot more detail but when you you began in the in the garage

[00:04:33] It was you had in mind at that time to grow a successful accounting firm was that kind of where you saw it then or did you have eyes on a you know on a bigger play you know 33 years down the line

[00:04:46] Oh no we never we'd never envisaged it would be as as big as what it is now but we when I started I we I came from an accounting firm over in Ivanhoe

[00:04:59] And I saw the quality of that firm in Ivanhoe and I didn't think there was really much in the northwest of Melbourne

[00:05:06] That could serve as businesses in the in particular the west of Melbourne and I wanted to provide that service and taking in Jeff steer from Arthur Anderson So I mean Jeff was a senior tax manager, you know we were an I did a postgrad in accounting

[00:05:23] You know we were delivering pretty high-end you know tax and accounting advice in back in 1990 And so we we sort of had we a vision was to create a business of the size and scale that gave all of our people the opportunity to to grow

[00:05:46] The and also have the service offerings to our clients so that they could they could grow and thrive

[00:05:53] And you know when we we you know come back to this later and then we're of the view that you need you do need scale in the financial services sector now

[00:06:03] Yeah the clients you were referring to then did you take an early focus on on on business vis-a-vis you know individuals like was that an early

[00:06:16] Look it I have a philosophy that I picked up from one of the chaps through we owe you go through ways the entrepreneurs organization

[00:06:26] Yeah, we you go through three stages of growth. Yeah the first stage is sales driven and then you take everything that comes through the door

[00:06:34] And we were no different right so we took salaries and wages we took you know we were capable of doing high-end you know property developers manufacturing at that time just from both our backgrounds

[00:06:49] But we then realized that you know doing $50 salaries and wages returns was was clogging us up and we had to make it we had to make a decision to simplify the business

[00:07:01] So you know one of the first things we did was to let those go and focus on the you know more substantial clients so you start off at that sales driven mode where it's like a family environment everyone knows everyone you do everything yeah

[00:07:16] And then you then you move into a more of an operational mode where you the CEO appointing a CEO was a big deal I mean because it was originally Jeff and I we made all the decisions actually for me being appointed CEO

[00:07:32] CEO was a pretty big pretty big decision at the time and and then I delegated a lockdown to an office manager who then became a general manager and then you know you have divisions and you have proper systems and processes that you don't have when you

[00:07:51] you know in a garage at home or you know in a small environment and then you get into this sort of the third stage which is the transformational stage which you know you need you do need external help and you need to surround yourself by really good people which we're able to do

[00:08:09] Yeah it sounds like for you to step out and become a CEO just just purely in in an you know even in a fast growing or well established accounting firm to establish that kind of position is a real statement about where you know you're going to be off the tools

[00:08:29] and focusing on you know the business at the accounting firm the business as opposed to just you know clients day to day is it that's quite a significant you know set up for what you just described them which is a base for innovation because you're running it like a you know a business as opposed to a practice where you're in

[00:08:52] Well we established a board a company board you know 20 years ago so we were one of the first accounting firms to do that so we ran it as a business a company where a lot of a lot of businesses and accounting practices more so run as a partnership where you know your your worth is how much

[00:09:14] you generate as a partner it is a significant step and it's not an easy step to for any entrepreneur to let go to put in place you know office managers and HR managers and and to you know and to then focus on your people growing your people but also getting in front of your referral partners and you and bring in the work

[00:09:41] so you get to a stage where you know someone has to you know focus on actually running the business and that's that's the that's that sort of probably the operational stage second stage I think of a business development and the third stage is probably you get to you then need a board a board around

[00:10:02] you and advisory board around you and good people and mentors around you to help you because you don't know everything you mean you it just it's a long process of of trying to you know understand what the you know the the opportunities are and also the you know the the weaknesses

[00:10:20] and threats that you've got in your business which I imagine being a CEO as opposed to a partner focused on producing more fees it does become a bit clearer that you know you've got an eye across the business rather than just on your day to day activities so it sounds to me like

[00:10:39] that was it's a huge investment the step away to you know create these this organizational structure that is about setting up for future growth is I'm sure there were trade-offs along the way that you know you'd want to ensure that you get the right return on later but you know as it was innovative

[00:11:04] for sure well it was scary I can tell you because when we did it the foods dropped yet because you're off the tools you're not generating enough so it's actually one of my very good friends explained it to me who who helped us do our strategic plan and at the time and he said look it's a hockey stick you do you do take a hit but then it's just it's just accelerated growth

[00:11:30] because you're growing you're actually getting off the tools and doing the work that could be delegated down to young up and coming people and giving them an opportunity to become associates and partners within the business and and that's where you get this this hockey stick effect and yeah accelerated growth but I can tell you it's not unless you've been through it it's really difficult difficult to explain to people and it is quite frightening I can tell you

[00:11:57] well there's a couple of you know attributes that is one is just letting go and you know handing over responsibility and believing in people that they're going to grow and do the job you know at a level that you're happy with but all as you say the financial hit like you could I think there is you know there's a lot of businesses out there accounting firms all sorts of

[00:12:18] businesses that are in that middle you know phase where they're just about sales and you know what can I you know create today and that's fine if that's what you want to do but when you know when they stop the business stops.

[00:12:33] That's right and there's probably no value in it.

[00:12:37] There's not a lot of value so you basically it's just you know the good will is the person you take the person out of it there's not a lot of lot of values so if you can actually step back I mean the CEO is replaceable.

[00:12:53] Yeah partners are hard to replace. Believe it or not.

[00:12:57] Yeah yeah and if you know if you're in a mode where you're driving and working hard collecting more fees along the way and you bank them and do something else with the money that I think that's a you know it's certainly a pathway legitimate model for some but you know what was saying here is you know your early days seen the opportunity and it might be a good time now to talk about where the business is at now and what you've been through in the last few years.

[00:13:27] Because that that is really the result of work that started way back in the garage and continued on through that phase of you know stepping aside and becoming CEO so where is the business today and what happened.

[00:13:42] If I could just maybe step back one one step before that.

[00:13:47] You know we were approached at least twice before we actually did a transaction three and a half years ago and I think that they were great look they're disruptive to your business I mean you in one case we were 12 months talking to someone listed entity.

[00:14:05] But we've learned so much about them we learned so much about the market we learned so much about ourselves because they actually put this you know microscope over us so we knew.

[00:14:18] You know what our weaknesses were and where opportunities were and when someone actually values you that's when the really hits home to you you know one is it the opportunity or are you leaving too much on the table. So those two twice happened to us.

[00:14:35] They came to you.

[00:14:37] Yeah they approached they approached us yeah they approached us and and that you know it's quite humbling when you get a phone call from someone and they say you know look we are you interested in my comment is you were always interested for the right by but you know you've got to get through a number of gates before it's the right deal

[00:14:55] and you know probably the the biggest gate for us was the culture fit with the organization that we that we were so having those two experiences prior to the phone call we got from you know we were part of the Macquarie van network which is a boutique organization with Macquarie bank.

[00:15:19] And you know our contact there said look we had a phone call from Paul Barrett from A's at NGA and I said well who in the hell is Paul Barrett.

[00:15:29] I've never heard of A's at NGA and they did their research and come back and they said can we think you should talk to them and we ended up having breakfast my chairman I had a chairman of my board grown Billings who was ex partner PwC him and I met with Paul Barrett

[00:15:47] and Barry McGee who was who is the general manager of accounting at the time and we just you just connected at the breakfast. And it was the connection was that we we had a clear vision of where we were going as a business.

[00:16:05] We don't know we we prepared a strategic plan three years earlier and we realized through the work we did with Macquarie van and our own research that we had to get scale after the Hain Commission into the banking sector and financial planning.

[00:16:24] We just realized that we needed to be bigger to be able to have the resources to be able to attract and retain people and the service offering for our clients going forward.

[00:16:35] So that that was very clear in our you know and how we were going to do that.

[00:16:40] One of the one of the ways was through acquisition and to build this innovation grants area though it to other two of the areas that we you know we wanted to do now.

[00:16:53] You know that Paul Barrett's vision is to effectively take a strategic interest in accounting firms and financial planning firms and basically support you to grow.

[00:17:05] So you know we don't have to deal with banks anymore if I find a target business that I need to do provided it's proper business case they'll back us.

[00:17:16] Now you know it there's a lot of work to do to get to that I can tell you but you know they've done you know over 100 acquisitions.

[00:17:26] So having that comfort that you're dealing with people that know what they're doing it gives the shareholders and partners at Matthew steer a lot of comfort that we're you know that we're not going to get ourselves into trouble which we did you know 15 years ago we bought an accounting practice

[00:17:41] and you know it was a mistake completely mucked it up. So yeah was it culture or was it just a whole.

[00:17:50] Yeah it was a cult the guy was a lovely guy but you know we thought it was was only a small like was really a tucking type yeah type business and we thought yeah this will be easy well it's a bloody nightmare all the staff left and

[00:18:06] the quality of his clients compared to ours was was dramatic. And you know the we couldn't believe just how he's how he's clients treated him it was terrible and we couldn't we couldn't have that you know that treatment with our staff it was just terrible.

[00:18:27] So you know he's a lovely guy we probably you know he's a good person but you know culturally when he when he came in he realized he was out of his depth unfortunately yeah and left.

[00:18:40] The yeah I understand deeply why you know cultures so important in a people business it's people internally as staff and people as clients and you know so that that beyond numbers and synergies and you know it's got to be it's got to be a you know the new merged or bigger organizations

[00:19:01] got to have compatibility around you know vision and you know the way things are done and you know the type of people that are you know that work in the organization and that you want to have stay there for a long time.

[00:19:15] It was just interested you so you had a you had a couple of approaches the third one came along Paul.

[00:19:24] Paul Barrett and was the and you had this acquisition that didn't go so well 15 years earlier so by the time Paul came around it probably been a position where you were able to say to make a really informed assessment that this is a good move to get to the

[00:19:44] because you've looked closely at a couple of others and that's that's invaluable although it can be a costly investment of time and you know and money.

[00:19:55] It was it was very time consuming those two and the final one was it took us six months to do the transaction and we but we were ready I mean we had and numbers were fantastic I mean from a from a preparation.

[00:20:11] Going through that trend the two transactions or potential transactions prior we were ready you know we we knew what to expect in due diligence.

[00:20:21] Yeah we knew what a term sheet looked like we knew what contracts look like so we you know we made sure we had you know competent advisors supporting us and good lawyers which was really important as well but.

[00:20:36] You know that was funny the numbers of the numbers I mean you you get a range I mean you've then got to be able to articulate.

[00:20:48] You know where you're heading as a business to get an uplift and we were fortunate we were able to do that and we got a good deal and it's proven a good deal for as an NGO as well as Matthew steer yeah yeah and it sounded like it there was a fact.

[00:21:05] It was fairly you and the chairman went to breakfast and sounds like immediately there was a you know a sense that this is this is a real opportunity it was that fair to say it happened quite you know you got that connection feeling.

[00:21:21] Yeah we so we were very comfortable with the two guys that we met Barry McGee was a third generation accountant from West Wion in New South Wales I mean he you know lovely guy Paul Barrett you know we connected with as well and over the six months in the due diligence I got to know Paul really well.

[00:21:42] The thing that you've got to look for is consistency what what they say they'll do and that's what we got.

[00:21:51] And so other transactions that that I've looked at if there's any inconsistency I walk away I'm just not interested in dealing with people that are not consistent that not saying they dishonest or whatever it's just if you've got problems that initially.

[00:22:11] You're going to have problems if it's a you know later on down the track and I can I can say that we didn't we didn't have any look we had issues I mean we had you know in terms of you always do with a transaction but our advisors were fantastic in working your way through that you know.

[00:22:27] So this this organization had a track record of doing lots of other acquisitions so that's where consistency you can see that because they've done it before and you've been through a few to a few dances yourself and you know that's not like first time for either of you.

[00:22:46] And I really do think that you know you know to get the to maximize a value business you need to do a couple of I think you need to at least you know be ready and we're already I mean we were absolutely ready investor ready but we weren't looking at that time we were we were on a grow phase.

[00:23:07] And basically what this enabled us to do was to do risk to do risk ourselves we're able to take some money off the wheel which was important.

[00:23:17] You know we've got young partners in the business young shareholders it enabled us to have a shareholders agreement that something happened to me my wife got a check on an agreed formula that was worth a lot to us.

[00:23:31] And young partners coming in they funded them you know if they were able to effectively organize with the bank to for them to buy in.

[00:23:42] So you know a lot of the issues we had were taken away from us in terms of we just had to focus on the business and growth. And it sounds like you personally and probably you know at least you personally still had runway you were excited about.

[00:24:01] You didn't need to sell out at that time totally and go play golf or whatever you do you sound like to me you had run way and you know that they painted a vision that you could you could be you know stay involved in a really exciting innovative growth orientation.

[00:24:19] And so they decided to practice. They basically backed our strategic plan that's what they did and they said can we want you to help help deliver it and execute it. So I mean you know if you know we sold out 51% right effectively.

[00:24:36] And you know someone says to you yeah we're going to back you to double it. I mean that's a pretty pretty exciting proposition. Hi there it's just a quick interruption to the podcast and it's a message from Kerr Capital a supporter of the podcast.

[00:24:56] If you're a business owner thinking about selling and you're unsure about what you should do. Well the worst thing you can do is jump straight into an unprepared business sale. Cross your fingers and hope for the best.

[00:25:08] If you want to take control get a sense of what your business is really worth and a plan to make it more sellable then head over on to the Kerr Capital website. Check out the value and sellability diagnostic.

[00:25:21] If it piques your interest contact me Michael Kerr or book one of the free 45 minute diagnostic calls. Now let's head back to the podcast. Love to get to kind of parlay into a chat about your as a you know an advisor to small business owners as well.

[00:25:40] Let's talk about what you'd advise them to do based on your own experience. But yeah it's you know this pathway that there's a total you can sell out your business some you know and then you can enter these joint ownership shared ownership models where you're still involved.

[00:26:03] And I think the level of complexity there that the upside when you get the two good partners one with all the capital or the experience you with your infrastructure.

[00:26:16] You know one and one equals seven but you know you are then it's you're no longer the sole owner and you no longer. Exit it and you know free to do whatever you want you're in a partnership.

[00:26:28] I mean it's not a formal partnership but you're working with another organization. So that's that I think there's a lot of opportunities for owners out there to to consider something like that because a lot of businesses do have potential.

[00:26:44] They don't have the capital to know how the people that there's a range of constraints on them to to achieving that. Sellings kind of they feel like they're going to get short change because there's so much potential but you know if you can't do it and you can't.

[00:27:01] It's hard to get value for it so it does open up the world of bringing in a shareholder but it's it's you know it's enormously tricky.

[00:27:10] You've been heavily involved with family business Australia you know and as an advisor day to day to you know other significant SMEs or private businesses.

[00:27:25] So what are your reflections on your own experience that you put into practice with you know with clients now about getting them ready to sell?

[00:27:36] Well you know we've got a couple of projects on the go at the moment where we're doing your strategic plan as the first step. So we go in as part of the we do it we do a deep dive into the client from a financial perspective.

[00:27:55] We look at their last three years accounts and really do a deep dive and we run run it through a program. We have quarter financial canvas froze at all the KPIs calculates free cash flow which a lot of a lot of people don't do.

[00:28:10] I mean and at the end of the day if someone's buying your business again look at what cash is actually generated from that business to be able to see well how can we pay it pay the debt back and watch it at what's our return.

[00:28:22] So we take the clients down that process and we do a strategic plan which gives them actions, accountabilities and timelines.

[00:28:35] And that we then usually most likely go on to an advisory committee or board and we hold them accountable on a quarterly basis and we drive those actions and hold them accountable.

[00:28:48] What we find is that a lot of people you know we see a lot of family business in particular that they've got lazy balance sheets.

[00:28:59] You know they've got because they're making good money I mean and the family's doing very well they don't push the push the business as hard as they need to.

[00:29:10] So they're you know their their inventory could be too high their debtors could be high too high or even their their pricing probably hasn't been looked at for quite a while.

[00:29:22] So there are sorts of things that we look at and we so we put structure and corporate governance into a business and give them a vision. What where are they now and where do they want to take it. And a lot of the times they're just treading water.

[00:29:39] They're there you know we've got one at the moment. You know the father you know is not well he's the founder and the kids are in the business I got three kids in the business.

[00:29:54] The amount of work they're all doing is ridiculous. I mean they're burning is burning his family out as well.

[00:30:01] And you know we need to restructure that business. He needs to put in a general manager and he needs to step down to see you and become chairman of his board. I mean he's in his late 70s. He's not well.

[00:30:14] So you know that's some of the things we do. So we get them ready by by actually giving them strategic focus and putting in place systems and processes that will drive them.

[00:30:26] Is this is this the sorry is this the owners of the businesses that your clients coming to you saying I'm not sure what to do or I've been approached. Where's it seated that they start to work with you to go through a very proactive plan.

[00:30:47] It's what usually happens. They get to a size where what they've been doing in the past is no longer working. Yep. So communications is a big issue usually in a lot of businesses. The communications are breaking down.

[00:31:00] They've got to a size where you know they don't know every client. They don't know every customer. You know so they they needed to you know to actually become a more sophisticated business to run it run it you know more professionally.

[00:31:18] They don't know how to do it. That's why they come to us to you know cut through that that barrier. So is it the triggers could range from I know there's more in the business to I don't have a succession plan.

[00:31:36] I'm a bit concerned that you know what happens if something happens. But I imagine being for you being close to them as as as the advisor that you start to have those more intimate conversations.

[00:31:49] Well I can think of two or three situations at the moment that we're having those discussions. We're putting in an advisory board at the moment because they're concerned if something happens to them will who what happens to the business.

[00:32:03] At least if you've got an advisory board there you've got you can you can then go and find a CEO to replace them or you've got there's some accountability there. There's some structure there which doesn't exist at the moment.

[00:32:14] So that that actually happens quite a bit that they're concerned about. The other issue is this wall who's going to take over and you know we're having those discussions with a number of family businesses at the moment.

[00:32:28] I mean the businesses are too good to sell believe it or not. They're making really good money. Yeah. And you know an option is to sell it in one case but on your on terms that are acceptable.

[00:32:44] And the family is saying well why don't we continue just to work it for another five years. Yeah. And that's that's that's what they're doing but they they need proper structure.

[00:32:55] And yeah and to be and to be ready because I think there's a lot of there's a lot of activity that I'm a part of now which is these unexpected approaches. And so you know this this idea of it's a linear thing.

[00:33:14] I'm at a certain age at a certain stage. I'm going to I'm going to get the business ready to sell in three years time.

[00:33:20] That's one pathway but you know if you've got a good business the probability that someone is going to knock on your door in any industry because a bigger competitor or someone else in the supply chain is they know who's going well.

[00:33:36] You know that probability increases all the time. So yeah being being actively ready. I do want to just go through that some more but I also wanted to just reintroduce some chain with Ken Matthews today on Small Business Banner podcast.

[00:33:54] Ken's still the founding partner and CEO of Matthews Steer. And no, no, I've stepped down a couple of weeks ago. So I've got David Rudge now the CEO of Matthews Steer. Sorry to pull you up. It's only happened a couple of weeks ago. For sure.

[00:34:18] Now that's we're going to get all the facts right. We've had this in the planning for a little while. But yeah, that's you know I'm fascinated with this.

[00:34:31] I think somewhere in the notes you talked about the level of unpreparedness for sale or the issues around businesses transitioning to new ownership and the risk that is there for the owners of those businesses and more broadly the you know the economy.

[00:34:52] If you know if we don't have a good pathway to transition good businesses from one owner to the other.

[00:34:59] Yeah, you're talking about this baby boomer tsunami that's happening with family with businesses generally across Australia and then you've got a lot of baby boomers into their 70s now late 60s into their 70s and the business is unfortunately in a lot of cases are just unsaleable.

[00:35:21] They're completely dependent upon the founder or the person that owns the business. And it's not it's other than the you know the the customers and the plant equipment there's not a lot of goodwill in the business.

[00:35:38] So they're their it's personal goodwill rather than rather than business goodwill which which is which happens a lot. But you know there is a there is a way forward but you've you've got to want to do it too.

[00:35:55] And a lot of the lot of lot of small business people you know don't want to make that investment. The other thing that I that I that I see which is fascinating is people don't know what they what they need to retire.

[00:36:09] They don't know the number to retire. And you know that's that's an interesting process to go through to which we take the clients through you know what's the number they want.

[00:36:21] And doesn't doesn't go whatever that number is doesn't equal the price of you or the value of your business right. It may it may it may when you you actually get some people that you know I had a client that had five years.

[00:36:39] He had me in Bucks sitting in his bank account in his business and we did a we did an analysis and we said look you don't need that amount of money. It's a risk having it in the business.

[00:36:49] He just looked at me says well I'm going to do with it. You know what I'm gonna do with it. So when you get you get the exceptions. Yeah you do.

[00:36:57] And like I'm being a little bit cheeky but you know there's you know the small small business owners there's hundreds of thousands of them. I think a lot of them have the business has been OK to good for them.

[00:37:12] As you say there's a lot of personal goodwill in there. Yeah. The to move from that to something that's sellable to somebody else it's an opportunity for somebody else does require an investment and and I you know you do that work with significant family businesses.

[00:37:30] I do that work with a lot of owners and and it's you know it is an investment of some money and some time but the payback you know is that you can at least usually you can establish a baseline for if you had to sell tomorrow what would you get.

[00:37:48] And sometimes that is a bit of a shock but also a Philip to say well you know what can we do to because I need I need X dollars to retire and I thought I had a cut. But I don't. Yeah look you've you've spot on.

[00:38:04] So part of that process when we go down the track of putting an advisory board in place after we've done the strategic plans to get a valuation get an indicative value and then we look at you know we'll ask the the

[00:38:19] value of all the business consultant what do we need to do to increase that value and it quite often it will mean we need to restructure the business in some way to to appoint a general manager or someone there to replace the the key person so it is transferable to to you know another another

[00:38:40] business or other other investors. Yeah so yeah and I think they're a really healthy part of that.

[00:38:45] If any of that diagnostic or pre-selling work is to also look at the business internally but also map where that business sits in the broader in its broader industry and there are some industries that are really alive getting approaches.

[00:39:04] There are others that there might be an there might be an obvious home for it even and you just need to you need to establish some of these things and it doesn't mean you're not you're going to do that.

[00:39:15] You know you're not going to knock on their door straight up but it it's you know it's taking putting a line in the sand by saying this is what your numbers say this is what you this is where you're short and here's some options to maybe increase value maybe to get a sale away on on a on a you know on some basis at least freeze you up to do what you want to do personally.

[00:39:36] I think you should get your business ready for sale all the time. You should be ready ready to go and that takes an investment but it also sharpens you up in terms of what you need to do in your business.

[00:39:49] It could be you know simple things about your trading terms those sorts of things trademarks in place all those sorts of things that you know that if you do get a knock on the door you need to be ready.

[00:40:01] So I think you know an investment in terms of getting a valuation done get an indicative value and saying well you know what do we need to do to increase the value where where is the low hanging fruit.

[00:40:13] You know to do this I mean if you don't sell it you're going to make more money and quite often you do risking the business as well at the same time which is you know which is which is a great outcome. Yeah.

[00:40:25] You went through that you know twice in terms of a dance where you know and he came out better for it I mean net you spend a lot of time and effort but you know you probably would say you came out better and I think that's the it's the same logic you know that this work that we might call exit planning we might call business sale readiness whatever you it's about improving the

[00:40:54] quality of the business and therefore it's also as you said it improves it de-risks the business.

[00:41:03] It probably if done well introduces the opportunity that maybe I can hold this business and put a manager in or do something or to keep it because at least you know you've the business is running a bit more closer to its potential.

[00:41:19] Yeah and that's basically what we did you know we we basically brought we were able to bring you know quality people and and share share equity with them and kept them and then we grew the business we grew the pie.

[00:41:34] And was able to create something it was quite valuable by doing that whereas if we had just kept it the two of us that probably would never have was reached the size that it is now.

[00:41:44] Yeah but would you would you have been I suspect not that you wouldn't have been satisfied just to run it like that you had a probably always had a bigger vision for what you wanted to do.

[00:41:59] Yeah look it was was always we I'm an entrepreneur more than an accountant to be honest I mean I just look for the opportunities in terms of creating creating you know assets and wealth and you know this has been a great great outcome for me as it is for most business owners.

[00:42:18] I mean you know someone said to me if you're not growing your dying and I believe that I think you need to grow and you need to be you need to create an exciting environment for people to work in to for them to grow.

[00:42:32] And you know if you can create a you know a business where people are growing and thriving servicing your customers it's a pretty good environment to work in.

[00:42:43] Whereas if you're just doing the work I mean I you know and you need to do that when you're starting you just need to do the work you just working.

[00:42:52] You know we're working seven days a week hard work but you know we we don't work seven days a week now I'd say we don't we work differently. But it's more of a corporate structure than a than a sole practitioner structure.

[00:43:07] Yeah so for an owner listening thinking I am you know I'm in the woods I mean the the weeds you know and I can't see any other way out than just keeping on working what what would just say to them about how to poke the head up and you know I mean you talked about using mentors and advisory board but you know what are what are other ways.

[00:43:32] I can't believe the quality of the people I've been able to attract to to mentor and be on our on our board over the over the journey.

[00:43:45] I mean you know if you if you look around for the best people you can you can find that note that are in your industry or just good business people approach them and say well you know would you mind mentoring can we catch up once once every three three to six months.

[00:44:01] Pay to see if they want to charge you that's the best investment over the month probably the biggest mistake I made is that I didn't do it early enough.

[00:44:10] I've probably only done it over the last 15 years probably you know we put out put our first business coach on 23 years ago and he trends to help transform our business. Yeah.

[00:44:24] So you've used coaches pretty early on in the in the business life right so you've you've you've point yourself as CEO you've engaged and used advisory boards and if you don't know what an advisory board is it's you know it's a it's a less structured board that you might you know you might probably companies have boards and to you know for governance and strategic direction and advisory boards are being increasingly

[00:44:51] more than private businesses to you know to help guide the business towards you know to bring in some external counsel and an external perspective without you know the formalities of a board. Look it's pretty lonely being a CEO.

[00:45:08] So yeah it's probably one of the loneliest jobs you can have and I think that you know I'd have you know I have mentors and I also have a board and I've had advisory boards.

[00:45:22] I mean the advisory boards usually go into a to a statutory board but you basically what you're doing is you just increasing your network of people around you that you can draw on.

[00:45:33] So a problem a problem that you have in your business you're sharing it across your whole advisory board and those people are advising you.

[00:45:43] They're not making the decisions they're just advising you of what and guiding you of what you should do and I found that invaluable and it's been able to really accelerate our business and as a as a CEO I've grown by having those people around me but.

[00:46:02] Absolutely without any doubt. Yeah to clear to open up to to share what your aspiration is and to and to realize that others that can can add value to that.

[00:46:15] I think even outside of a formal board an advisory board and even mentoring coaching just I think sometimes putting yourself out and talking to other business owners. There's a lot of forums where you can go and do that.

[00:46:31] Now I'm not saying they're all the right forum but there are a lot of other business owners out there that can you know just share their own experiences which you can get a lot from and it could be just pure in a pure business networking environment.

[00:46:47] Well I was nine nearly 10 years with the entrepreneurs organization. I got credible support from them and family business Australia has a forum group just specifically for family business members.

[00:47:01] Yeah you know look I look back I mean I'd go to those meetings once a month and I'd be flutters attack because of you know staff issues that were you know that normally are the you know everyone's got them.

[00:47:15] If you're a CEO that's what you that's what you're doing you're dealing with people issues a lot. But to be able to air them with other entrepreneurs it's it's it's incredible and they don't give advice they just share experiences which is which is fantastic.

[00:47:32] And yeah you know I love you know I still still very good friends with the guys that I was in the O with.

[00:47:39] You know who you know how we've met you know yeah yeah yeah and you know because there is a you know a shared understanding as I say it's lonely as a CEO or a business owner.

[00:47:50] It's very challenging to to talk to staff employees it can be really difficult to take those issues home and talk about them not in every case but yeah so another business owner CEO will you know likely of experience.

[00:48:08] Some are all of what you're going through and better to try to look for a way to tap into that.

[00:48:17] We've all got similar issues it's you know if it's family you're dealing with family issues at times you're dealing with you know business issues which quite often is staff issues how to deal with personalities partner issues shareholder issues.

[00:48:34] You know I mean you're always share that and then there's your own personal health and well being that you need to be you need to be mindful of as well and you know if you're not well and you're not fit.

[00:48:47] You're not eating healthy and keeping fit you're not going to be able to perform as a CEO and a lot of people forget that.

[00:48:57] So that's what an EO brings it's a it's a total sort of support mechanism and I you know I got a Norse benefit and I'd recommend anyone you know CEOs or if you're in a family business family business forums.

[00:49:14] You don't have to be a CEO to be in a FBA forum you just need to be in a family business and and you're going through the same issues as what we all do.

[00:49:24] And even if you don't call yourself a CEO if you're running a business and you're responsible for all the decision making you are you know for all intents and purposes the person in charge and we use that term CEO.

[00:49:38] You know very broadly but it's it's applicable because you cover sales marketing operations finance everything really and and to you know I love the step you took out of being a partner to being a CEO with it and having an eye across the whole business and there's more to it in any business doesn't matter

[00:49:58] whether it's an accounting firm or a manufacturing firm there are departments or divisions or units and you can't you know you've got to give attention to them all.

[00:50:09] Yes, the step from you know being a you know an owner operator to a CEO is a big step but really one is internally I mean that when I appointed my office manager or general manager I basically delegated all the internal operational areas to it.

[00:50:28] It freed me up enormously so I could just focus externally on the business and on their people and that was that was a massive step for me and I think the business and you know it's an important step to make.

[00:50:40] So you're asking in terms of what you do as a transformational for businesses probably that step in a lot of cases.

[00:50:45] Yeah, look just I did want to also there are a lot of owners have their their current trusted advisors be an accountant or lawyer or financial planner in our coach but what you. What you.

[00:51:06] It seems to me that we there can be situations where that advisor trusted advisor male may not be the right.

[00:51:15] Advisor through a stage of planning and getting ready to or considering your options around selling what's your comment on that and in the need to potentially shake up, shake things up and and talk to specialist or different advisors.

[00:51:33] Well the question that I'd ask if I was a business person looking at an advisor is just ask the advisor what experience that they had in particular circumstances. Have they have they acted in mergers and acquisition era.

[00:51:48] I mean you know what transactions are they being personally involved in. I mean it's one thing being an advisor and another thing actually living it.

[00:51:57] You know a good advisor will understand the trauma that you go through when you're selling a business and not many you know unless you've been through it yourself and you've you've you've run shotgun with your clients through that process.

[00:52:15] I don't know how you can read it in a book. You've got to actually live it. You know I used to get a phone call 430 every Friday during the transaction that we do with AZNGA from my advisor saying how are you going.

[00:52:31] Because he knew that you know it's your baby. It's you've got a lot of you know you've got 30 odd years blood, sweat and tear tied up in a business.

[00:52:39] You need someone that's that's watching your back and watching you personally because you go through enormous you know emotional troughs and it is incredible. You need the right people in your corner not only from an advisor. You're a good accountants and good lawyers.

[00:53:02] You need a whole and it's not so much getting the best price. Yeah. I mean the price should look after itself if they know what they're doing. It's getting the deal done and getting the terms of the contract that are acceptable to you.

[00:53:17] I think that's what a good advisor will bring because quite often you know you'll get approaches. I've seen businesses you know where you know we've brought being brought in too late and they've fallen over and the advisor really didn't know what they're doing.

[00:53:35] And they'd approached potential a potential purchase so that we're just sharks and it was never going to happen. Yeah.

[00:53:46] I think it's the biggest untapped area for improvement is managed as an advisor understanding what a good outcome for your client looks like financially but also personally for the team for life after.

[00:54:02] And and and you know this got your advisor checking in every you know every Friday at 430 is an example of someone who understands what an emotional roller coaster it is.

[00:54:16] And they understand the games that get played to put you off and to test you and went to bite when to not buy it. Not buy it. You know so yeah invaluable but beyond it's a good price. You know is it a good deal.

[00:54:31] Is it is still the deal you want to do. Do you know. Yeah. So it's vitally important to be able to talk to someone who can give you that perspective as well.

[00:54:43] Is a fair bit of preparation to get to that point before you even enter into a transaction and I think we've discussed that you need to be ready. You need to know what what the number you is acceptable to you before you get into that transaction.

[00:54:57] Otherwise you're wasting a lot of time and you're wasting everyone's time as well. Yeah. Ken look we've it's been a rich discussion. I particularly like you're able to bring to the discussion your experience as an advisor but also as an as an advisor.

[00:55:17] You've been you know you've been you've been through the ringer a few times and you've you know completed a very significant transaction and so you have seen both sides of it.

[00:55:29] That you know this podcast my reason for doing is to try to encourage the owners out there who are for better or worse are chugging along and no deep down that they're not doing something they should do about it.

[00:55:47] And so I think that's a good point to consider about considering you know the impact if you know if if they don't prepare to sell or be ready to sell doesn't mean you know we are going to prepare and sell tomorrow but just to have that sense of readiness

[00:56:05] and awareness of what your options might be. And so comments suggestions advice about you know how to poke your head up out of the weeds and

[00:56:17] I would I would say start with you know getting a trolling to identify who a corporate advisor is that can that can help you at least understand what the value of your business is and what you can do to improve the value.

[00:56:31] And that would be would be the first step I think. Yeah. Quality broker a corporate advisor. Yeah.

[00:56:40] Yeah someone who deals in that stuff day to day and start with evaluation what's it worth I mean and you know that a lot of a shock you or you and in most instances you know people overvalue their businesses what they think they're worth I mean that's just what happens.

[00:56:58] But then you then you go down a track well what can we do about what can we how can we how can we improve it and that's you know it's a two or three year process to do it properly. Yeah.

[00:57:09] And it may well be that you need to you know you definitely know that I think the document will sell your business as your information information memorandum which comes out of your strategic plan.

[00:57:21] So you need it you know you know you need a good strategic plan you know you need to know where you're going I mean that's your roadmap for the future so. You know there are steps that you can take. You don't need to be in sale mode.

[00:57:37] But you know this you know that investment is well worth it because you'll get you'll get it if you're not if you're not getting increased profit and increase cash flyer than you're doing something wrong.

[00:57:50] Just by having you know the someone externally look at look at your business we were fortunate we did it twice where we were approached and we were forced to do it. You know it was disruptive.

[00:58:03] It's very disruptive but just a look back and gave us credible understanding of what the market was and and what we could do with our business and how attractive our business was to others. Yeah. I mean that was the that was the humbling thing about it too. Yeah.

[00:58:17] Yeah. Humbling and also very informative right because it really painted you a picture of how someone else sees the business. All right Ken. I think that might be a good point to to finish on it. Yeah.

[00:58:37] I said earlier rich you know discussion on really you know pragmatic issues and that we all need to deal with. So I really thank you for your time and wish you well you know under the with an you know as what's your what's your role.

[00:59:00] Well my role now is mergers and acquisitions and sitting on advisory boards. So yeah I'm on a number of advisory boards and that's where my focus is really business development but mergers and acquisitions.

[00:59:12] So yeah yeah okay well I wish you well if someone wants to reach out to you Ken what you happy for them to do that. Yeah reach out for me through LinkedIn or my you might you know you can get me through the web page at Matthew steer.

[00:59:27] Edison Fields so happy to happy to happy to to take any you know calls or point people in the right direction happy to do that. All right. Thanks so much. Thank you very much. My pleasure. Thank you.

[00:59:43] Well I hope you enjoyed that episode of Small Business Banta and I hope it was helpful in you getting the most out of your small business ownership.

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