Small Business Broker Joe Vagnone

Intro: [00:00:07] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me, brought to you by the Business Radio X Ambassador Program, helping business brokers sell more local businesses. Now here’s your host.

Stone Payton: [00:00:32] Welcome to another exciting and informative edition of Buy a Business Near Me. Stone Payton here with you this afternoon. This is going to be a marvelous episode. Please join me in welcoming to the broadcast. Mr. Joe Virginian. How are you, man?

Joe Vagnone: [00:00:49] Thank you so much, buddy. I appreciate you having me on. You know, I’m not I’m quite familiar with with the mic, but I’m not familiar with being on this end of it. So you ask me questions. I’ve got to I’ve got to be honest with you. It’s kind of intimidating.

Stone Payton: [00:01:04] Well, I don’t think it will be in just a moment, because we’re going to have a conversation about we’re going to be in your wheelhouse, man. You clearly have a great deal of specialized knowledge and expertise in this arena of helping folks buy and sell businesses. And I know in a moment I’d like to dive into a few of those tips, if we could, but I well, I’ve got a thousand questions and we will get to all of them either. Sure, but but there are a few that I have, and one that comes to mind immediately for me is how do you and I may not use the right word so you coach me through it. How do you price or value a business properly? And isn’t there maybe sometimes some discrepancy or a little bit of a gap between what a what an owner thinks is baby is worth and what a buyer might feel like is worth.

Joe Vagnone: [00:01:57] Yeah. Yeah. You were generous by saying gap. So. So you are correct. This is a business valuation. We do a lot of what we call market driven valuations. And what I like to tell my clients is, listen, I’m not asking you to agree with me. I’m not asking you to even accept what I’m saying is being accurate. What I’m asking you to agree with is it’s what a buyer thinks. And so that’s really what I’m trying to do is define the expectations for sellers so that they understand what a buyer thinks and how a buyer is going to be valuing their business. And if we’ve done that, then if there are these, you know, divergence of of valuations, at least they both the buyer and the seller know why they’re coming at this from a different standpoint. It also helps with the negotiation. Once we get to a point that we’ve got a target buyer that’s interest. Did that did that answer your question or I can get much more in the weeds if you if you want me to.

Stone Payton: [00:03:00] Oh, no, absolutely. That’s perfect for for now. So in terms of time, timing, it strikes me that it might be very difficult to influence shift a potential buyers perception tomorrow or this month on my business. But if I know that I want to sell my business down the road, surely there are some things that we ought to be thinking about or some things we ought to be looking at so that that perception would be very different when we’re ready to sell. Is that accurate?

Joe Vagnone: [00:03:33] That’s absolutely accurate. And I like to talk people through this process and explain to them, listen, there are multiples for buyers to consider, multiples of sales, multiples of cash flow. Again, we don’t need to get into the to the details of that, but those multiples are attached to your business. Right. If you’re the seller, it’s attached to sales and it’s attached to to the cash flow that you create. So you should be considering these interest, right, these multiple interests when you are operating your business, because it will help in the value of your business once you’re ready to sell. Just a just a broad example. Let’s say that you’ve got a business that buyers like to look at gross sales. That’s how they want to create a a multiple of gross sale. Well, if you’re in the service business, you may agree to some business that increases sales but isn’t really profitable because it ultimately helps with the valuation of your business. On the opposite end of the spectrum, you may be a business that purely cash flow is what buyers are looking for. So you may not try and increase sales so much. You want to make sure the margins of what you’re selling are good so that the cash flow is good. Those are sort of operational choices that decisions you can make on the front end before you ever decide to sell your business.

Stone Payton: [00:04:59] Man, I can hear it in your voice. You must really find this work incredibly rewarding. What do you enjoy the most about it?

Joe Vagnone: [00:05:09] So that’s such a great question. You know, I’ve been doing this for years. I love to tell people I have bought and sold, owned and operated more small businesses than anybody you’re going to meet. And now I know when I say that a guy like you is thinking, oh, I’ll test you on that. And and that’s kind of the idea, right? You know, I’m sure there’s some people out there, this world that have that have done more, but it makes. You think through. Hey, Joe must really know what he’s doing. He’s been around the block enough that he kind of gets this right. And so the reason I’ve been doing it for so long, whether personally for myself or for clients, I just absolutely love it. It is me. You know, I tell people and I’m sure you’ve heard this 100 times, I’ve been self-employed since I’m 17 years old, not because it was my choice. It’s because there’s no way in the world anybody is going to hire Joe. Right. So, so, so because of that fact, it’s just it’s just it really is part of my life.

Stone Payton: [00:06:03] So with that kind of background, was there this this moment, this this catalytic event that compelled you to get involved specifically in this arena?

Joe Vagnone: [00:06:13] Yeah, that’s such a great question. And I’ll try and make it as short as I can. I own the largest closed market environment restaurant concept in the Southeast. I had 40 operations in Charlotte, metro area, 26 in Jacksonville, Florida, and 18 operations in Nashville, Tennessee, 5000 square foot commissaries and all of them and truck drivers and area managers and blah blah blah blah blah. Right. I read a book on how to create a money machine. It was actually a real estate book talking about how to buy a piece of property, get a second mortgage. You know, this is back in the eighties now, right, when you could do that easy. Right. And so I literally built my business by doing that. So for every operation I had, I’d have a small house, residential house that I’d buy and then get a second mortgage on, which is how I would fund the operation. Right. And so that same book talked about how to create a money machine, which is when you sell the business, finance the sale and create a a cash flow. And so it took me about three and a half years and I sold all of those operations myself. Probably 70% of them I sold to the to the managers and created this sort of informal franchise where if they needed some help, in some cases, I literally had to teach some of these women how to how to write checks and that sort of stuff.

Joe Vagnone: [00:07:34] But I created this informal franchise and I love telling people I was making about $7,000 a year less with no operational responsibility. So life was good, right? You know, and that’s when I realized, you know what, I think there’s more money in selling the businesses than there ever wasn’t actually operating them. So it was this natural progression. I got to be pretty good in proficient at selling these businesses, so I just started moving in that direction. And then it seemed to be a natural thing that if I could do it for restaurants, I could do it for other kind of businesses as well. So I created this informal capital investment firm, you know, way back before there was a cool name for it. I was just helping people by business and helping people, you know, taking a piece on the way in, taking a piece on the way out. And so it just became this natural progression for me.

Stone Payton: [00:08:24] Well, you’ve really piqued my interest when you talk about financing, because when it comes to deal financing, we can actually you can get pretty darn creative with it, can’t you?

Joe Vagnone: [00:08:36] Oh, yeah. You just sort of hit on my sweet spot, right? I love to tell people and there’s no real way to measure this. Right. So so every time I make one of these bold statements, I know a guy like you kind of chuckles, right? But I love to say I am the top small business. Please hear the word small, small business broker in North Carolina. And the reason why is I wrote a book on how to buy a small business and the core premises. It’s not about price, it’s about terms and deal structure. And so you hit on it. That really is the core. And if you’re going to buy a small business, you want the business to pay for the business as much as possible. And I’ve done my share of those type of deals, and I certainly help and advise my clients through those those type of structures all the time.

Stone Payton: [00:09:25] So do you find it more complex, more work when you’re working with a business that has multiple owners?

Joe Vagnone: [00:09:35] You know, that’s interesting. Most of the time I won’t even get started until I’ve clearly defined the expectations. So whether it’s five owners or one owner, I want to make sure everybody is on the same page because when I’m speaking for them, I want to make sure I’m speaking with one voice. So most of the time I can get the partners to agree and we can agree on one person that I’m going to communicate with, and then they talk to the partners. I’ll tell you where it gets tricky is with family members. When family members are trying to buy a business where family members are trying to sell a business, getting them all together, it gets really tricky. So family members to me is probably a little bit more emotional and tricky than partners, only because I have learned over the years to get all those partners together on the front end.

Stone Payton: [00:10:27] Yeah, I bet you’re. You’re part therapist sometimes, right? Getting them all singing the same notes.

Joe Vagnone: [00:10:34] Man. Don’t say part. I am. Absolutely. I’ve got I got a sister and brother in law with master’s degree from from Boston University and therapy and I can hold my own with them when we’re having conversations. Right. So there’s no question about it. You know, the statement that you’ve heard many times, you know, it’s it’s just business, not personal. Well, if you’re a small business owner, you know, it is very personal. And so all of this is personal. And most of the choices and decisions small business people make are because of personal interests and motivations. And so you have to get that first so that it makes the actual deal structure much easier to put together.

Stone Payton: [00:11:15] Well, and then there’s the whole sales and marketing aspect to this thing, because if you’re taking my business to market, I’m operating under the impression you must have some some rigor, some discipline, some methodology for doing that effectively. And I don’t know, maybe sometimes I don’t want the the entire market to know that or maybe even my employees. Yeah. To yet speak to that a little bit.

Joe Vagnone: [00:11:40] Yeah. Well you, you, you hit on you kind of there’s, there’s some secret sauce in this, right? So, so I’m going to have to be careful before I let you push it out to your your market. Right. But the truth is, there are some things that I have put together that make us marketing the business very successful. One of them is I have a database of over I haven’t counted in a while. I want to say about 16,000 independent buyers and sellers. People like you and I are small business people. And so that database that we can do a search on, based on how much money they have, what their interest is, that’s the first place we go. So for example, if I’ve got a color, whatever you want, it doesn’t matter what the business is. Let’s say I’ve got a a light manufacturing business. The first thing I would do is do a search in my database for anybody that is inquired on like manufacturing and their finances fit with what I’ve got. And I’ll send them out a a inquiry and give them an exclusive ten day window of opportunity before I go, quote, live to the market. And so I can sell about three or four businesses a year just with that exclusive program, because buyers appreciate that they’ve got this window and it forces them to kind of move fast. And to your point of your question, it’s very discreet. You know, out of 16,000 people, I might be sending a exclusive opportunity to 200, maybe. In some cases, it might be as little as 50. And so that discrete approach is really important. The other thing we do really well is describe these businesses without describing who they are and where they are. And I don’t have to tell you, that’s kind of tricky.

Stone Payton: [00:13:31] So when you were talking earlier about making the shift into this arena, you clearly had the background and the motivation and some knowledge and expertise to pull it off. Did you also have the luxury of a mentor or two that kind of helped you along your way? That’s part one of the question, actually. The second part is, now that you have been at this a minute, have you had an opportunity to to mentor some other folks in this space?

Joe Vagnone: [00:13:59] Yeah, great questions. First of all, you are not successful in business without a mentor in your life or two or three. So I have certainly had mentors and each and every one of the different industries in which I have progressed. And. Right. Because you can you can tell that and it’s in my story is very common to most small business people. And that is, you know, these progressions of it’s one industry and it naturally moves into the next industry. And so I have had some mentors that have been very helpful. To me, one of the things that happened to me years ago, it’s such a special treat. One of my very first restaurants was a small sandwich shop inside of an office building. And so you can imagine it was this this small group of people. And every day around 3:00, these executives would come down for a cup of coffee and a cracker. Right. And tea just to relax for 30 minutes or so before they finish out the rest of their day. And I get to sit and talk with these people and gather so much information. And so I was getting this big business advice for this small sandwich shop for years. And those guys have been friends and have carried me through many years of of different business life cycles that I’ve had.

Stone Payton: [00:15:28] Well, that was my experience as well. When I made the shift from the training consulting arena to this kind of specialized little sandbox where we try to help folks use the platform to to grow their businesses. There’s no way in the world that Lee or I, either one could have could have accomplished what we have to date without the benefit of some mentors. And now we’re enjoying as we have studio partners as we expand the network. I really enjoy, you know, trying to trying to help the next person with what we think we’ve learned over the last eight years.

Joe Vagnone: [00:16:01] You make a wonderful point, which is we have learned over the years they need that information, right? They need that jump start, which is what we got. Right. And so you don’t know what you don’t know. And until somebody gives you that little piece of information, I tell people often, listen, I’m going to tell you what I know. And then once I tell you, you got it right, you know? And so so it’s just one or two pieces of information properly placed with the in the right person’s hands, with the right motivation. And it is such a joy to watch them move forward.

Stone Payton: [00:16:36] So back to the sales and marketing conversation, how does the whole sales and marketing thing work for you? Like how do you get to have that conversation with that light manufacturer or whatever it is? Is that hard? Or have you kind of cracked the code on that too?

Joe Vagnone: [00:16:54] Yeah, well, here’s you know, I’ve been doing this for so long now, right? That, you know, probably my answer today is different than it was ten years ago. Right. But I will tell you this, that the key is trust and credibility. Small business people are always looking for somebody they can trust and they find to be credible. Credible means genuine. And so you remember I was describing myself as, you know, patting me on the back. Right. Is I’m the best guy in the whole world. Right. You know, a small business broker. Right. And I had to clarify small business broker, because genuinely I have operated and owned many different small businesses. None of them have had gross sales over $5 million. So I like to tell people I am an expert. You will have a hard time finding somebody as skilled, as capable as I am at 5 million on down. But I am not the guy that you absolutely need. If it’s something over 5 million, that’s what that’s why I partner with association with Jeff Snell with online business brokerage out of Raleigh, North Carolina, because he handles the businesses above that. You really have to know where you are and you really have to be comfortable in that area.

Joe Vagnone: [00:18:17] So as long as you’re genuine, that’s step one to actually attracting small business people that are interested and doing business with you and they can start to trust the statements that you make. That being said, I have had a small business radio show that I have been putting on now for going on ten years, and it is a wonderful opportunity to invite people. And I don’t think don’t I have to tell you this, right? You already know this. You’ve already cracked that code, right? And that is you and I never met. And now all of a sudden we now know each other because of your program. What a wonderful way to promote and actually network with other people, referral with other people. And it gives you a chance to present me to your listeners that otherwise they may never hear me. And so that platform for me has been very helpful so I can expand my marketing. One of the things I do is take on a co host every month and allow them to bring guests every Friday morning. And so that helps me grow my, my, my database and it helps me grow my marketing and networking. Does that does that answer your question?

Stone Payton: [00:19:40] Well, it not only answers my question, it absolutely lines right up with my experience in using this platform. It’s such a marvelous way to genuinely serve whatever ecosystem is important to you and build real relationships because, you know, you get past the in this frame, you get past the kids in the weather pretty quickly, and you’re giving them this gift of giving them a chance to share their story and promote their work. But the relationships that you build doing this, well, that and it beats the heck out of work and doesn’t it?

Joe Vagnone: [00:20:13] Yeah. Well, I’ll tell you something. One of the things that also does, which is so important in my industry, you know, I’m asking you for a lot of money to sell something. You’ve spent a lot of time developing and. Right. I want to help you sell your biggest asset. And so you really have to trust me. And so if I if you can hear me every Friday morning on the radio and other business people are trusting and respecting me, it allows you to trust and respect me also. So it helps on the credibility side, which is really important.

Stone Payton: [00:20:53] You’re going to have to send me an invoice because I could just play your clip for us to sell our services. But but no, obviously.

Joe Vagnone: [00:21:00] You’re not going to get invoiced, but you are going to get an invitation on my on my radio show. So so you’re going to have to you’re going to have to share your time with me, buddy.

Stone Payton: [00:21:09] Fantastic. Well, I’m looking forward to that. So, for example, if and it’s not really an if, it’s a win, but if Lee and I are looking at selling the business radio network, how far out should we begin that planning begin to build a relationship with a business broker? Does it vary or is there some kind of rule of thumb about when you need to start getting your ducks in a row on that?

Joe Vagnone: [00:21:34] Okay. First of all, I can tell you a sharp business card because you you ask the question knowing sooner or later you’re going to sell your business. Right. It’s it’s not as if you intend on selling it today. You enjoy doing that. Right. But, you know, sooner or later, somebody else will be operating your business. I mean, it’s just, you know, we’re not going to live forever. Right? Right. And so that’s wise of you to know that. So what I like to tell people is if you start thinking about 36 months out, talking to some people, putting your team together, you any problem that you would have had with the organization, you will have time to correct where a buyer may not even know that those things existed. Now, I say that because there are these things you want to do. You want to get your books in order, right? There’s some you know, you want to get some systems in place. You know, we can go through all that stuff, kind of like painting the, you know, the dining room, you know, and cleaning up the bathroom before you sell your home. Right. And so you want to do those things. But the reality is, there are some voids in your business, some mistakes you’ve made, some marketing that was good that you don’t do anymore, you know what I mean? Or if you had more money, things, you would do, all of those things.

Joe Vagnone: [00:23:02] We can detail them out and a buyer really wants to look at those because I tells people all the time, I’m going to value your business based on what you’ve done today, but the buyer is going to buy it based on tomorrow. And so if we’re not only cleaning things up and takes about 36 months to do that. Well, right. We’re also detailing the things we’ve done. Should have done. Could have done. So it’s a package in my world. We put together a confidential memorandum and we have something which we call brokers opinion. And that’s where we drop in what we think the future could look like or some things they could do better to improve the business. So as you’re cleaning things up for those 36 months before you want to sell, you’re also detailing some things you may not want to do, but that another buyer may choose to do. Does that answer your question or did I ramble on that?

Stone Payton: [00:24:02] No, absolutely. That was perfect. In a moment, I am going to ask you for a handful of pro tips to to to help sellers, you know, get their their business ready to sell. But before we go there, I did just enough pre-show stalking research to know that I can ask you about this. I’d love to get your your insights on this whole art skill, practice, discipline, on negotiating.

Joe Vagnone: [00:24:35] Yeah. Yeah. Gosh, where do I start with this? You know, I think you probably can tell I’m pretty good at negotiating. Right? And it’s not because I’m brilliant. And I went to Harvard. Right. It it’s it’s because my experience over time has led me in one direction or another. And so there are areas of negotiating that are really important for us to be able to know and share with our sellers so that sellers know what we’re trying to do or how we’re trying to help them. Because, you know, one of the interesting things that happens when we’re putting our our systems and processes in place, we’re trying to drive a buyer through a process so we can control it. And sometimes that control requires me to be able to manage that process. And so I tell people often, listen, the reason why I want to be in control of this process, not because you have a negotiated half your life just as much as I have all of us. Small business people have negotiated tremendous amounts of stuff. Right. But the point is, as a broker, I can plug myself in and I can read buyers in a way that is much harder for a seller to be able to do. And then I can advise what we call prep a seller for those sooner or later conversations that they’re going to have. So it is it’s an interesting question. I probably could talk for hours on all of the details of negotiation, but the core point is that a broker or any third party person that is experienced, that broker will be able to help you because essentially what they’re doing is they’re plowing the road. So before you even step into the negotiations, there won’t be a conflict. The broker will have already been able to warn you what’s happening. And that’s the core.

Stone Payton: [00:26:47] All right, before we wrap, let’s leave our potential sellers out there with with a handful of of your favorite pro tips for for getting the business ready for sale.

Joe Vagnone: [00:27:00] Okay. So let’s do this. Let me let me give you three of them, if I may say, you know, and shamelessly plug my website stone, if you don’t mind.

Stone Payton: [00:27:10] Absolutely.

Joe Vagnone: [00:27:11] They can go to Jay Wagner, CNN.com. That’s Jay Wagner, CNN.com. And we have all of these tips on there. They also can go to my YouTube channel where we’ve got all of these videos on there, if you like to hear me talk. If you don’t go to the website, you can read it. You know, I’m an acquired taste. I would just say, you know. Right. So so if you go to Joe Wagner and business broker, we’ve got we’ve got these 20 tips videos that you can go to. So I’m just going to touch on three of them. Your finances have to be in order. And the best way to do that is a third party bookkeeping firm, accounting firm, to put it in order, because buyers really appreciate that. And we’re here’s the key word trust that so a third party accounting firm puts your accounting in order is very important. The second thing is you have to be able to have a measurable lead generation source that somebody believes they can duplicate or continue to operate. Lead generation. Tomorrow’s business is why I’m buying your business. I love to say this. Stone Nobody is going to buy your business and write you a check unless they think they can do something better than you. Lead generation is how they think that’s going to happen. So you really need to be able to measure your leads and be able to define for people where they’re coming from. And the third thing is you’ve got to know your customer. And the best way to know your customer is a customer database. Customer profiles are just the core of what buyers are buying nowadays. It’s no longer the the name or the location. It is database and customer base that they’re buying. And the more you tell them what the profile of the buyer is, the more than their mind’s eye. They can come up with other products and services they can sell them, and those three things are going to create great value for your business.

Stone Payton: [00:29:16] What a marvelous and informing and inspiring conversation. I am so glad that we got a chance to visit and I think you and I are probably going to get a chance to visit some more. We may find some other ways to to work and play together. Let’s leave our listeners with some easy ways. You mentioned one, the website. Let’s mention that again. And then any other way for them to reach out and have a conversation with you or someone on your team, whatever you think is appropriate, you know, email, website, LinkedIn. But let’s make sure they can get to you, man.

Joe Vagnone: [00:29:47] Thank you. Yeah, you can email me at Joe at Jay Vagabond or go to my website, Jay Wagner Buncombe and I will be more than happy to send you a lot of this information. I, as you can tell, enjoy having conversations, talking about small business, and I’ll be more than happy to talk to you. There is no cost or obligation or responsibility. Feel free to reach out to me and I’ll be more than happy to talk to you again. That is if you want to email me at Joe at Jay Wagner. Stone Thank you so much, my friend. I really do appreciate you letting me be a part of this.

Stone Payton: [00:30:28] Well, it is absolutely my pleasure, you guys, you’re doing such important work and we sincerely appreciate you, man. So I can’t thank you enough for for joining us this afternoon.

Joe Vagnone: [00:30:39] Now, don’t forget, you’re going to have to return the favor, and I’m going to I’m going to get you on my show soon.

Stone Payton: [00:30:44] Yes, sir. It’s a date. All right. This is Stone Payton for our guest today, Joe Vigneault and everyone here at the Business RadioX family saying we’ll see you next time on Buy a Business Near Me.