Episode Transcript
[00:00:03] Speaker A: Welcome to create wealth through franchising podcast and Kim Daily TV. I am your host, Kim Daly. I want to educate, motivate and inspire your business ownership journey by interviewing ceos, leaders, sales, coaches, and exceptional franchisees to.
[00:00:22] Speaker B: Learn their valuable insights and strategies that we can apply to our own business ownership dreams. Now onto the show.
[00:00:35] Speaker A: Welcome back to create wealth through franchising podcast and Kim Daily TV. I am your host, Kim Daily. Today's guest. His name is Charlie Janes from Palm Beach, Florida. Charlie, welcome to the studio of Kim Daily TV.
[00:00:50] Speaker C: So pleased to be here and thank you for your enthusiasm over my name.
[00:00:56] Speaker D: Now that I got it right, I am excited to interview you today because.
[00:01:01] Speaker A: For those followers out there, you know that in 2024, I have launched a new series of interviews. Historically, the create wealth through franchising podcast has been focused on sharing the inspiring stories of franchisees. Right? To help those of you who are on the sidelines get in the game. Now, here's the cool thing about Charlie. He is a franchisee of two different franchises, but he's also a coach. So this year I'm adding in the coaching videos or interviews because there's a whole conversation that needs to happen around not just saying yes to your dream, but showing up for your dream every single day. Now, Charlie really loves to talk about the exit strategy and exit strategy planning. So we're going to make that the focus of this interview today. But before we talk about that, please introduce yourself to the followers of Kim Daily TV.
[00:01:56] Speaker C: So great to see everybody appreciate the opportunity to be here. I'm Charlie James, focal point growth and exit advisory. So I basically work with businesses of all types, owners that want to scale their revenues, build better teams, and plan for the right exit in life after work.
[00:02:14] Speaker D: I love that.
[00:02:16] Speaker A: What's the other franchise that you're a part of?
[00:02:19] Speaker C: So when we left the corporate world, I spent 30 years growing tech businesses out in Silicon Valley. And my wife and I checked out one day because we found somebody like you, Kim, who emancipated us from the corporate world. So we love franchise coaches, but she ended up zeroing in on right at home. And I'm so proud. In the last two years, she has grown her business from zero to 150 employees, and she has four units.
[00:02:48] Speaker A: Wow, that's amazing. And you did all of that. So when you were emancipated from Silicon Valley, freedom.
[00:02:58] Speaker D: Freedom from the w two. For all of those who are out there feeling like you need to be emancipated, lean in right now.
[00:03:05] Speaker A: So is that when you made the move from California to Palm beach.
[00:03:09] Speaker C: Yeah. We drove all over the country with our three dogs, figuring out where we wanted to live and what we wanted to do. She saw Palm beach, saw a unit open. She bought it the next day, and now we are here growing businesses.
[00:03:22] Speaker D: Oh, my gosh.
[00:03:22] Speaker A: Well, that's an amazing market for senior care.
[00:03:24] Speaker D: For those of you who don't know.
[00:03:25] Speaker A: Right at home is a age at home type of a business. I'm very familiar with it. I've placed many a very good franchisee into that system. It is kind of like in my heart, a blue chip stock. You can't go wrong investing in the right at home franchise. So you've got that going with your wife, and then you're a business coach. So you took all of your w two years, everything you were doing there, and you funneled it into giving back to your local business owners through the business coach. Okay. I love the setup. So let's talk a little bit about beginning with the end in mind, or.
[00:04:00] Speaker D: The question I'm going to ask you.
[00:04:02] Speaker A: Charlie, is when should people start thinking about the exit strategy of their business? I mean, let me preface that by saying I believe all businesses in franchising should be built to be sold. I mean, if your brand matures, you have equity, and that equity is yours upon exit. So why would you not want to consider that exit strategy moment? But you tell us a little bit about the exit strategy. Who should consider it and when they should start planning for it?
[00:04:31] Speaker C: Well, I think there's two things about when you start planning and what outcome you want. Selling to a third party fully or partially is one of the options. But a lot of our owners really care about setting the business up for their children or their children's children. Some of us, our right at home business. One of our mission is to give partial ownership to our caregivers. That makes our business, it's part of our social mission, but it also makes the business more valuable for a buyer because they'll have dedicated employees coming along when they buy. So there's a lot of different things that mean exit. Maybe we should use the word transition. But when you start planning early, there's no reason for any business not to have, after its first couple of years, an initial estimation of value and some assessment of how transferable it is. Why? Well, it turns out that in the general world of businesses, only 17% of businesses put up for sale sell. Now, as you know, in the franchise world, that's less of an issue because you've got all the packaging and all the good materials. But still, a lot of times, franchise owners aren't happy with the terms of their exit, their condition. As a matter of fact, the exit planning institute, I'm a certified exit planning advisor, estimates that 85% of people who sell their business are unhappy with the terms they've sold them for within the first six months. And it's primarily because they didn't plan. And I'll tell you a little bit more later about what's involved with the plan. But did that answer your question?
[00:06:08] Speaker A: That's an amazing answer. I just wanted you to keep going. So they build their business to sell it, and then they create a buyer, and then they're unhappy. Why did they sell it for too little.
[00:06:21] Speaker C: There's three major areas, right? So first, they feel that they don't have enough financial security for the life they want to lead. We're all living longer, and I'm in the home care business. Most of the people we serve don't have a financial plan and don't feel like they're able to get the care they need late in life. So it takes a lot of money, and especially if you want to travel or invest in your community or start something new, you need a lot of money. So one is financial readiness. The second one is readiness. So it turns out that 25% of the people who sell their business or try to sell their business kill the deal during the transaction because they're afraid they don't know what they're going to go do. They don't have a plan. They often say things like, I don't know what I would do if I don't have an office to go to. So part of the planning is just getting them in that mindset. And then finally, the third thing is having the business prepared with not only the right financials, but four kinds of capital.
You want to be differentiated in terms of your human capital. That's why we're developing people for our right at home franchise that would provide a premium to a buyer, structural capital, your processes and the way you do business, your differentiated capital, and then, of course, your customer capital. The right mix of clients make you more transferable and more valuable to a buyer. And that takes a little time to do, but that's why you want to have a plan.
[00:07:55] Speaker B: Hey, daily Coach fans, if you're loving this episode, please do me a quick favor and leave me a five star rating and a short review. Your feedback fuels my growth and rankings and shows others that this podcast is valuable. Now back to the show.
[00:08:14] Speaker A: I want to go back?
[00:08:15] Speaker D: There were so many things you said that I was like, if you're watching the video, you saw me go like this. When he was on the.
What was the one, Charlie? When you saw me go like this, you said, oh, that.
[00:08:27] Speaker C: When buyers, especially when I drive, when.
[00:08:31] Speaker D: Buyers go to sell their business and they often ruin the deal, I was, like, cringing over here. It's why when people say, are you going to help me sell my business?
[00:08:40] Speaker A: I say, no, you're going to find a business broker.
[00:08:43] Speaker C: Well, I have an anecdote for you.
I told you, my wife is up to four units now, and she's bought a couple of those from right at home, but she's bought two units from people that wanted to sell. But we tried to buy out somebody completely around us. Actually, we did twice. And both deals fell through because we were the ones directly working with the broker. So that's a lesson learned. I'm sorry, not with a broker. With a seller, you should always have an intermediary between the two to take out the emotion.
[00:09:15] Speaker D: It's so hard selling your business when it's your baby. It's almost like if you're selling your house that you built from scratch, right? And it's your custom home. And so the perceived value of what you see is very different from the objective person on the outside who doesn't have that emotional attachment. I can tee up a great candidate.
[00:09:34] Speaker A: Who'S just ready to dive in and.
[00:09:37] Speaker D: Look at your business.
[00:09:38] Speaker A: And the owner doesn't have the financials ready, like three years of tax returns or doesn't have their books in order.
[00:09:44] Speaker D: Can'T sell what they're doing and why they want to sell.
[00:09:49] Speaker A: The.
Sometimes when people are first coming to the idea of owning a business, you know, Charlie, that they're shrouded in fear. And so if they're like, well, if somebody's selling the business, what's wrong with know?
[00:10:01] Speaker D: And I'm like, nothing. Like, if they're smart, they built it to sell, right? So. But the incoming buyer is looking for the gotcha.
[00:10:08] Speaker A: Like, there's got to be a hole here.
[00:10:09] Speaker D: Because if it was so good, why would you be selling it? Right? And I spent a lot of time coaching through that mentality only to serve.
[00:10:17] Speaker A: Them up to a franchisee directly, who then ruins the entire thing. And I'm like, oh, dear Lord.
[00:10:24] Speaker C: Yeah. And it's one experience when it's somebody who was like me coming out of a corporate world. So you're afraid of that change, so you're suspicious, but if you're rolling up your business or multi unit franchise to a sophisticated buyer, like a private equity company, probably what we'll sell to. That's like punching yourself in the face. That's like saying, please question my numbers, question my integrity.
[00:10:53] Speaker D: I love that. That's so great. Okay, so share with the followers how.
[00:11:00] Speaker A: You help as a coach. I'm guessing that this is what you.
[00:11:03] Speaker D: Wanted to talk about.
[00:11:04] Speaker A: So is this where you really shine as a coach to people? And for those listeners who are out there who are thinking, gosh, I'd like to position my business to sell it. Should I reach out to Charlie?
[00:11:16] Speaker C: Well, I hope they do. But first off, so this planning, we call it exit or transition. But first off, it's a great growth strategy. So typically what I do with clients, I want to meet them 4510 years before they want to sell. Because doing all of this thing, having your accounting right, making better decisions, generating more profit to your bottom line, is just a great way to make more money. And what happens to a lot of us is opportunity. Destiny knocks. You get unsolicited offers. So by having the accounting right, by knowing what your financial walkaway number is, by having a backup plan, what you want to do, and by knowing what your business is worth, hint, hint, call this guy flash.
It's pretty easy to do. And then you know confidently how to respond.
And we should talk about what is involved with planning on a broader level with other advisors. But did that basically answer your question?
[00:12:17] Speaker A: Definitely did. And so this is a long term relationship. It's not something that you wake up one day and go, I think I'm going to sell my business. I mean, this is probably why the majority of people who sell their business are unhappy afterwards, because that's exactly what happens. So if you can begin with the end in mind and know from the beginning what you're building toward and what that exit should look like, whether it is transitioning it to your children or transitioning it to another owner. And then when you transition it, do you stay on for some time? Like, are those terms that can be negotiated, or is that something that the owner directs to attract even the right type of buyer? Because I'm sure there are different buyers that are looking for different scenarios.
[00:12:57] Speaker C: Oh, Kim, you couldn't have been more right. It's all of those levers, and you want to have the right level, those levers based on what you want. Some of my owners want to get rid of the operational experience, but they want to keep selling. So they want to sell the business fund the retirement and then keep collecting a paycheck as the salesperson for the business. On the other hand, one of the reasons why so many people aren't happy when they sell their business is it's common for a buyer to want to pay out the value of the business, not all up front based on incentives and things. And those are almost always bad deals for the seller. They usually don't get what they think they're going to get. So you need to be very careful of that.
[00:13:41] Speaker A: How many times when an owner comes in does the business go the wrong way? After you see where I'm going with that question, like where the first owner got it to a certain place and then it was on a growth trajectory, but then the new ownership comes in and tweaks some things or changes it and actually makes the business decline. And so to your point, if you had a valuation based on ongoing profits, but then the new owners don't create that, is that why you're saying, like, that deal is bad?
[00:14:17] Speaker C: Well, it's very common in non franchise businesses. It's really common with franchise businesses. It's less common because you have all of that structure and formula for success. But there are three types of buyers. There's lifestyle buyers, people like who I was, my wife were when we bought our business, we needed a next phase for our life. There's financial buyers, like the private equity companies, but then there's strategic buyers. Strategic buyers are the ones that want to buy the formula and the know how, but then apply a lot of capital and scale a good idea into something bigger. So this really happens with the franchise systems? I advise. So I work with a lot of early stage franchise systems, helping them package a system to really grow. And that's really where they need a lot of capital. And those with the right partner take off, but with the wrong partner, they die a gruesome death.
[00:15:16] Speaker D: It's always about the right partnership.
[00:15:18] Speaker A: I like that. This makes me think of like when I watch Shark Tank, right. And I cringe at the valuation that.
[00:15:26] Speaker D: These people put on their business. Right. I'm like, have you ever watched this show before you went on it? Right. These people make up this valuation.
[00:15:34] Speaker A: So when people come to you, is.
[00:15:36] Speaker D: That part of what you help them.
[00:15:39] Speaker A: Through is like determining the valuation they have now, but then projecting to if X, Y and Z happens, your valuation would be here.
[00:15:48] Speaker C: Yeah, exactly. So I license a system from a company called Value Builder and it enables me to input with any one of your clients in about 20 minutes of time of filling out a short questionnaire. We can give them a very good estimate of their business on a bell curve against all the other companies in their space. Now, that's only going to be as right as the information they put in, but I'll make an offer for your listeners. Anybody that wants the draft report, I'll give it to them for free. If they put in code. Kim is awesome, which they probably do all the time.
Typically, you need to do a little extra work, something they call recasting, where we adjust the financials a little bit and then I'll walk them through some of their answers and we'll adjust it. And there'd be a little bit of a consulting fee, but not a lot. But what that really says is that it's not a lot of work for them to get an idea of what their business is worth from a highly trained professional.
[00:16:46] Speaker B: Hey, daily coach fans, if you're ready to begin your own journey to find the perfect franchise, please email me right now at inquire at KimDaily TV. My services are totally free for you. That's inquire at KimDaily TV. Now back to the show.
[00:17:08] Speaker A: Do you see that franchisees who come in and own multiple territories or an area have higher valuations of a business because they have more control of the market than a single unit operator? That may just have a substantial business, but with one territory.
[00:17:24] Speaker C: Yeah, I mean, that's a magic formula. So businesses with more scale and like businesses have higher multiples. And it's primarily because the other sub buyers, there's lifestyle buyers and they're just eking money together to buy something. But a financial buyer or strategic buyer will pay a higher premium, and they only can make so many purchases, so they look to buy and scale, so they pay a premium for a bigger business. So that's one of the reasons, besides our social mission that my wife is stringing together right at home franchises.
[00:17:55] Speaker A: I like that, too. When someone's thinking about investing in a business, are you the person they should talk to in terms of like, in my consultation, I talk a lot about beginning with the end in mind. We begin with your goals. Like, where do you see your life 3510 years from now? Because I really look at kind of like reverse engineering from where you want to end up using the business as a vehicle to drive that growth. And that's oftentimes where I start planting seeds with people when I learn about how much money they want to make. And not that I can make earnings claims, Charlie, but that I can help.
Typically that kind of income is going to be generated by multiple territories or multiple locations. So start planting seeds that this is going to be maybe a little bit bigger than a single unit operation. So I'm doing a lot of that kind of general set up, but I'm not an expert and people know that. I'm just guiding the conversation to kind of plant seeds and open their mind. But if somebody really did have a generational wealth plan in their head, a legacy building wealth plan, would you be the person they should also talk to in the beginning, even in terms of selecting the industry? Because oftentimes people will say to me, well, those industries aren't going to be around. And I think really, I don't see it that way.
I think that most franchises I've worked with for 20 years have been here for 20 years, and I don't know how many owners here that are starting a business want to own this thing for more than 15 or 20 years.
[00:19:28] Speaker D: Right. So I'm always like, really? I think it's going to be around.
[00:19:31] Speaker A: But is this a consultation that you also have with people in terms of even buying the right business for their long term goals?
[00:19:41] Speaker C: I would love to say, yeah, I'm the right guy, but honestly, people like you, franchise consultants, are specially trained and typically have assessments. I think you and I talked, I like to use something called the Zoracle assessment that helps match people's skills. So yes, I can do that, but I'm not an expert. What people hire me for typically is making the decision between being a single unit owner or a multi unit owner. They're two entirely different skill sets. In the single unit, at least in the beginning, you're doing the work, you're doing the accounting, you're doing the servicing, you're doing the selling. As you scale up to multi units, you go to more of an executive mindset and you coach a lot on mindset, so you'll appreciate that. So we have to get them up above the business, thinking more strategically before we run out of time, though, since you used the word legacy, it's not just what happens in the business. So I'm a certified exit planning advisor from the exit planning institute, and that's an organization that accountants, estate planners, financial consultants, we all report to that so that we can work as a team. I often, as a value advisor, act as the quarterback for them. And what we try to do is we try to mine as much legacy from the business depending on the outcome that the owner wants. So that could be selling it or making it healthy enough to live on with the children, but I coordinate with the financial planner to make sure that we're extracting money at the right clip. If the business is going to sell, we have to calculate what the taxes would be and find a tax mitigation strategy. That's not something I can do. I'm the guy that has to take off his shoes to calculate his restaurant bill. So we bring in the accountants and the financial consultants, but I act as the quarterback with the idea that the business has to thrive. And I'm the expert there, but I'm willing to be the quarterback so that we optimize the legacy impact that jumps.
[00:21:39] Speaker A: Out of the it's awesome. Like anything else, Charlie, it's all about being surrounding yourself with the right people. Like having a vision for what you want to build, thinking from the end, and then working back and attracting mentors and coaches alongside you to help you do it the most efficient and effective way possible.
[00:22:00] Speaker C: That's beautiful.
[00:22:01] Speaker D: It's like anything else, right? That's why you use me to help you find the right franchise. That's why you use Charlie to help you build to that exit strategy.
[00:22:08] Speaker A: I mean, this is awesome. I think this is going to be an incredibly great interview that's going to help a lot of people start thinking from the end. And I hope that a lot of people will be encouraged to reach out to you using that code. Kim is awesome to get that free evaluation tool.
[00:22:31] Speaker D: Is there anything else you want to add to conclude this awesome interview?
[00:22:36] Speaker C: You know, I'll give you my website that talks more about how I work with customers and there's lots of free tools there and anybody engages with me.
I'll also include them with podcasts that I do, education things. I have a steady stream once or twice a week of content for owners that want to build a legacy.
[00:22:55] Speaker A: What's your website?
[00:22:57] Speaker C: Well, my website is charliejanes focalpoint.com.
[00:23:02] Speaker D: You got it.
[00:23:03] Speaker C: Kind of catchy.
[00:23:04] Speaker A: Charliejanes focalpoint.com. And we will put that in the show notes below so that you can find that and reach out to Charlie for further questions about transitioning or exit planning for your franchise business. Charlie, thank you for being my very special guest today here on Kim Daily TV.
[00:23:23] Speaker C: Thank you for allowing me to be very special.
[00:23:25] Speaker D: You are. For those who are inspired to begin.
[00:23:29] Speaker A: Your journey thinking about what is the next hurrah for you and is it a franchise business? You know that I want to be your daily coach. Please follow the email on the screen right now or reach directly out to me at Inquirer at Kimdaily TV. That's inquire at Kimdaily TV. And until next time, my name is Kim Daly and I want to be your daily coach.
[00:24:01] Speaker B: You can find more content just like this on my YouTube channel at KimDaily TV. And if you're inspired to take the next step to explore franchises match to you, please email me right now at Inquire at KimDaily TV. That's inquire at Kimdaily TV.
