Episode 41: Selling Your Small Business: Real Talk on Buyers, Profit, and Letting Go

What if the business you’ve poured your heart into can’t be sold when you’re ready to move on?

In this eye-opening episode, Jennifer Kok sits down with Jessica Starks, business broker and Exit Factor expert, to break down everything entrepreneurs need to know about building a business with resale in mind — even if selling feels miles away. With 80% of businesses never selling, this is a must-listen for anyone building a business they hope to exit someday.

Key Discussions: 

• Why 80% of businesses never sell — and how to avoid being one of them
• What makes a business “sellable” (and what turns buyers off instantly)
• The dangers of owner-dependence and how to step out of your own way
• The emotional side of selling — and why you need an expert on your team
• The difference between running a good business and selling one at a high value
  
  

Whether you’re planning a future sale, thinking about stepping back, or just want to make your business more profitable today, this conversation will shift the way you think about ownership.

Meet our Guest: 

Jessica Starks is a seasoned business professional specializing in exit strategies and business transitions. As the owner of Transworld Business Advisors and Exit Factor in Grand Rapids and Lansing, she offers comprehensive services in confidential business sales, as well as exit planning and preparation. 

Recognizing a market gap, Jessica established her own business to assist owners in exiting their companies. Her focus extends beyond baby boomers to encompass all business owners seeking to transition their enterprises while preserving their legacy and ensuring continuity for customers and employees.

Connect with Jessica: 

https://www.tworld.com/grand-rapids-and-lansing
https://exitfactor.com/offices/grand-rapids-and-lansing

Meet our Host: 

Jennifer Kok has been a business owner for over 25 years and now is a business coach. She turned her first business into a franchise and successfully sold it 20 years later.  She was passionate about building a business and a family at the same time.

If you’re ready to go beyond overwhelm and truly grow your business, I invite you to check out the Earn More Stress Less Growth System. It’s designed to help creative business owners like you increase revenue, improve profits, and finally pay yourself more—without burning out.

You have three options to join, depending on where you're at in your journey—and all of them are built around real-world strategies that work.

The time is now. No more waiting, no more guessing. Let’s build a business that not only grows, but gives you more freedom and fulfillment.

https://nextwavebusinesscoaching.com

Still underpaying yourself after all the hours you work?
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Join my FREE masterclass and learn how to:
✔️ Price for profit
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Instant Access Webinar Replay found here: 

https://nextwavebusinesscoaching.com/webinar

Transcript

Jennifer Kok (00:01.078)
Welcome, Jessica. It is so good to see you today.

Jessica Starks (00:04.842)
Good to see you too. Thanks for having me on your show.

Jennifer Kok (00:07.79)
So I'm so glad to talk with you about the exit strategy of owning a business, because that's not something most of us think about. But before we dive into it, tell us who you are, what you do. Kind of give us a background for those that don't know you.

Jessica Starks (00:21.63)
Yeah, so I'm Jessica Starks. I have been a business broker for the last nine years, helping people buy and sell businesses. About a year ago, I also invested into a company called Exit Factor, and Exit Factor helps businesses get ready to sell. So we say if you're ready to sell today or within the next year, we need to take your business to market. So I have a franchise called Transworld Business Advisors for that. But if we can have time on your side,

Get your business more valuable. That's really where exit factor comes in is the pre-planning and preparing to sell your business.

Jennifer Kok (00:58.062)
So what I've learned, you I owned a business for 20 years and I sold it. You and I had a mutual client that I worked with her to help her prepare her business for sell, to sell, and then you took it and found a buyer for her.

Jessica Starks (01:02.57)
Mm-hmm.

Jessica Starks (01:10.922)
You did such a great job of scaling her business. So kudos to you, Antar.

Jennifer Kok (01:14.624)
Well, thank you. And you did a great job of getting more than she thought she could for that business. So that's why I thought it was really important to talk with you today, because I feel as business owners, you know, we, start these businesses, we're all in, we're running like hamsters. We love it. We're passionate about it. And we don't ever really think about exiting. And I know some people think,

Jessica Starks (01:20.52)
Yes, thank you.

Jessica Starks (01:36.969)
right.

Jennifer Kok (01:39.468)
They might have a child who might want to take it over. And a lot of times they're disappointed when that adult child decides not to. So take us through, I guess, first of all, when do you recommend somebody starts thinking about exiting?

Jessica Starks (01:53.588)
Yeah, I've heard the saying start with the end in mind. So when you're starting a business, you need to start with the end in mind. And I know it sounds premature, but why are you in business? Is it a hobby? know, do you not want to make money? Do you want to be stressed out? You know, all these things that go into business ownership, we want to make your business more successful for you while you're owning it. So more profitable, less owner dependent. I mean, business owners,

are in the business to provide a service and what they're good at, but you need a team of people around you to provide as much service to your clients and communities as possible. So I would say, yeah, as soon as possible, the conversation, any education can get you started.

Jennifer Kok (02:35.256)
You know, I think.

Jennifer Kok (02:42.804)
And I think you just hit, you know, very impactful start with the end in mind. It is a mindset. It is definitely a mindset. And you know, what are you building? Are you, is it a side hustle? Is it a hobby or are we building a business? And I see it all the time and I talk with clients through that all the time. So let's talk about owner dependent. That to me seems really key. And a lot of times the business is very dependent on the owner. And I can't imagine that's really attractive for a buyer.

Jessica Starks (02:47.86)
Mm-hmm.

Jessica Starks (03:01.662)
Yes.

Jessica Starks (03:12.425)
Correct. So, you know, we've seen and I've heard from other, you know, people in the industry, basically it's a funnel. You know, if that owner's at the top doing all the tasks at the top, who's your buyer? Your buyer is maybe one person that can follow along and learn everything you do and they have experience and whatnot of all those tasks that you do. But the more you put it down to that one task that you do,

you're going to have so many buyers that can take over that one skill because you've delegated all those tasks to other people in your business. So to find the right buyer and to give you more competition, it is going to be key to delegate the roles that you do not need to be in. But as business owners, you can be a control freak and that's fine. know, type A personalities, maybe I'm speaking for myself here, but

You know, it's okay, but just understand you're gonna have a harder time getting the most money for your business if you're wearing all the hats in your business.

Jennifer Kok (04:17.784)
OK, so that's probably one mistake or something that buyers aren't very attractive to. Tell us what else makes a business attractive for a buyer. What is the? OK.

Jessica Starks (04:27.059)
financials is huge. You know, people have owned a business for 50 years or 30 years or even 20. I mean, that's a long time and they've developed their brand. But if you're not making money with your brand, if you're not putting out cashflow with your brand and having transferable business activities, your business is worth little to nothing. So it's really important that

Sellers understand the value that buyers see in a business is the cash flow from the business. What is the business going to return them to allow them to pay X dollar amount for your business? And if it's not profitable, mean, businesses do sell as an asset sale. So people think about what is my business worth today? Well, they may not think of the goodwill. They might only think of the real estate, the hard assets like equipment or inventory.

The great business that we want to help transition and get you value for in addition to that is the goodwill of the business. And you might think it might be Facebook likes and Google reviews. All those things are important to develop what the risk reward is of a business. But a buyer wants to see that cash flow from the business to pay you that extra level of what you deserve.

Jennifer Kok (05:47.406)
So let's dive into goodwill a little bit more, because that can be very vague, right, or seem very ambiguous. So how do you portray goodwill to a potential buyer?

Jessica Starks (05:50.143)
Yeah.

Jessica Starks (05:56.672)
Yeah, so Goodwill is going to be your team of people, your staff that you have in the company, the roles that they have. It's going to be your customer base and that customer base is the cash flow that it's going to generate from your business. So we've seen a lot of profit margins over the years. If people are not watching the profit margins with the inflation or now we have the tariffs, there's different

ratios that people need to look at and stay on top of because if it's not going to put money to the bottom line, it's just going to eat up that goodwill multiple that you're going to get for your business. So it's really important to stay on top of your financials, which is going to show how strong your business is with those customers, with those employees. And that's really where the goodwill comes into play. know, again, we talk about customers. We don't want customer concentration. So if a client tells me they have

five customers, that's kind of risky. Especially if we then say one of those customers is 80 % of my business, that's really risky. And so all those risk factors determine a value of a business for a buyer.

Jennifer Kok (07:09.902)
So it's interesting because a lot of times owners really position themselves as the face of the business, especially businesses that could be a little bit more service-based. Think of like an interior designer or photographer. Do those businesses sell? And that's just a couple of examples. And how does that work when the owner

Jessica Starks (07:17.47)
Yes.

Jessica Starks (07:21.203)
Mm-hmm.

Jessica Starks (07:28.286)
Yeah.

Jennifer Kok (07:33.216)
Intentionally, we talk a lot about that, build your personal brand, be the face of the business, earn trust with your community and your clients. How do you start to, I guess, separate that a little bit or prepare the business if that's the case?

Jessica Starks (07:34.495)
Mm hmm. Right.

Jessica Starks (07:48.414)
Yeah, there's a lot of technicians out there, know, ones that are the photographer, one that is a massage therapist that want to start their own business. So you might be in corporate America and decide, you know, I'm going to start my own business. Or to me, it's better to buy a business because the cashflow and customers and staff is already there. So you get a jumpstart. But, you know, when you buy a business and you have the skill set of doing what you're acquiring, I think that's a bonus for all parties involved.

but you still have a team behind you. you want, you know, you don't want to be Jennifer's interior design. You want to have a brand that can be transferable to somebody else and a team behind you that can transition. But having the skillset of being that interior designer, massage, I mean, that's, that's great. And it just might not sell as a highest multiple possible if you don't have a management team in place and,

You know, we talk to people who want owner absentee businesses all the time. Well, wouldn't that be great for any of us? But you still, you know, when you're acquiring a business, you still need to know what's going on in that business.

Jennifer Kok (08:50.22)
Yeah.

Jennifer Kok (08:57.932)
Isn't that funny? That seems to be kind of this idea of entrepreneurship that you can become the own absentee owner. And let's be real, I haven't seen too many businesses where they're completely absent. Yes, they don't have to be in the weeds, like you said, and be the doers of everything, but they still need some leadership and they still need some involvement to continue to be successful. That's so funny. So let's talk about the buyer's perspective, because to help the seller, the business owner,

Jessica Starks (09:10.877)
Right, Absolutely. Yes. Yes, for sure.

Jennifer Kok (09:25.87)
How do they go about, like how is funding these days? know, give us some kind of background on if I'm a business that either I want to buy a business or it could be somebody listening that wants to get into entrepreneurship or wants to sell their business. Is that a hurdle that a seller needs to worry about?

Jessica Starks (09:34.161)
Mm-hmm. Right.

Jessica Starks (09:41.792)
So I was actually a commercial lender back in the day before I became a broker and There is money out in the marketplace. There's so many different ways to structure a deal It's not like 2008 9 where the banks completely, you know stopped lending You know, they are they have money. They want to lend to seller or to buyers to buy businesses You know interest rates are fluctuating. You know, they went up they've come down

you know, that does hinder some cash flow, but deals are getting done still. And, you know, what is the normal rate? mean, two's, three's is not the normal rate. You know, we're a little bit back to normal, maybe a little bit higher than normal, but still, you know, what's normal anymore? It's what we perceive. But again, deals are still getting done. Banks are still lending money. Also, sellers are willing to have some skin in the game.

You know, I personally don't recommend that somebody seller finances 100 % of the deal. I have heard of deals like that getting done, which makes me really nervous. But you know, they want to see a successful transition of their business. So for them to have some skin in the game, 10, 20 % seller financing, that's absolutely possible. People have cash in their bank account or even there's something called a ROBS, a Rollover for Business Startup.

And that's where you take your retirement funds and those retirement funds you convert into a C Corp and then you can, I'm not the specialist on that, but I actually personally did that in one of my adventures. So it worked out well for me. And I think it's just another option to get access to capital, lots of different ways.

Jennifer Kok (11:26.382)
You know, I have heard about that and I think that is really creative. And I sold a business that I owned for 20 years and I did have a little bit of seller financing. However, it was my manager. know, she, had kind of mentored her and transitioned the business over to her. you know, for me it was successful. But I think there is a little bit of confidence when the seller stays involved. Do you see that happening a lot where the, you know, it's hard because as the seller.

Jessica Starks (11:34.565)
Mm-hmm. Yeah.

Jennifer Kok (11:54.562)
You want to stay involved. It's kind of your baby. You want to make sure the transition goes well and that they continue to be successful like you were. But then you also have to back off a little bit. It's kind of like having that adult child. You can't like just pipe in with every idea you've had, you know? And so do you feel that makes it like, should sellers be ready for that? Do you feel like that's a better transition if the seller can stay involved a little bit?

Jessica Starks (12:04.072)
Right. Right, right, right.

Jessica Starks (12:17.233)
Absolutely. I mean, it's not like selling your home where you can turn your keys and send them to the buyer. You definitely have a transition period and it really just depends on the skill set needed to run the business or what skills the buyer is going to take over from the owner and the training that's involved with that. Plus you have your employee introductions, you have your customer introductions. So that warm handoff of the business having success with the buyer comes a lot from the seller. So

It is really important, but how long, that just depends. And sometimes buyers think they need the seller longer than they do. I always believe in tapering down what that buyer is gonna require of the seller. And sometimes, maybe a lot of times, the buyer's like, all right, I don't need the seller anymore. Or the seller could get offended if these things are changing, because the buyer has new ideas.

You know, it's definitely important to know that when you sell your business, on average it takes eight months to sell a business and it could take longer, it could go quicker and then it also may never sell. But it's important to consider as a seller, if you have a 12 month window, consider that you have also the training and transition that goes into it. So when you're looking at your timing, it's important to consider that too.

Jennifer Kok (13:37.102)
Okay, I'm kind of surprised it only takes eight months. That to me doesn't seem that long.

Jessica Starks (13:40.272)
Yeah. Yeah. So on average it is eight months. Now again, 80 % of businesses actually never sell and that's a really, yes. Yeah. So, you know, people try to sell their business by themselves. People over ask for their business. They're emotional when it comes to selling their business. So depends on which way you go.

Jennifer Kok (13:49.86)
okay, take a second.

Jessica Starks (14:04.383)
the statistics are that 80 % of businesses never sell, so only 20 % are selling. So there's so many different pieces to a sale. mean, a lot of business owners have never sold their business before. Or their best friend told them their business is worth X times their revenue versus X time their owner benefit or their EBITDA. And some realistic expectations are not set upfront. So it's really important.

Jennifer Kok (14:20.991)
All right.

Jessica Starks (14:32.093)
begin with the end in mind. It's really important to know what your investment is, not what your investment is in the business, but what your business is worth because that is part of your future. That is part of your financial plan when you go to retire or transition into something new. You know how much is in your bank account. You know how much is in your investment account, but a business is really not liquid asset. And so still knowing what that's worth is important to your financial future.

Jennifer Kok (15:01.454)
Yeah, and I think you nailed it where I feel a lot of business owners have an emotional attachment and they think it's worth a lot more. And, you know, sadly I've seen really good businesses struggle and they thought it was going to be their retirement. And like you said, it's hard to find a buyer. So let's talk about that DIY versus hiring somebody like yourself. I think there is a stigma there where I don't want to pay the broker fees. don't, I can just do it myself because everybody loves my business as much as I do.

Jessica Starks (15:19.465)
Yeah.

Jennifer Kok (15:29.698)
But you and I know firsthand, I worked with a mutual client to help her with the standing operating procedures to get her, her business so it was very attractive. And then we brought you into the picture because you have the skillset on how to do evaluation, how to put it to market. It's an art and it's an, and so I really, I feel like you're better off hiring somebody, but I'm sure you have conversations all the time with people who think they can do it themselves.

Jessica Starks (15:38.739)
Yeah. Yeah.

Jessica Starks (15:58.496)
Well, I agree with you, Jennifer. So yes, you should hire somebody to help you sell your business. But of course I'm in the business and I'm saying that. But I see so many horror stories of emotions that get into play between a buyer and seller. that tension can, there will be tension in that deal somewhere down the road. And to have an intermediary in that.

in that business are, you negotiating the deals or, you know, being the sounding board for if something goes sideways versus them sounding board each other. You know, I always say I'd rather be the bad guy than have the buyer and seller be the bad guy in that deal. Also, competition, you know, we help businesses sell, we drive competition to the deal. So I've seen sellers that pick this buyer and that buyer one at a time and they waste time.

they aren't getting the competition because who's in control here. It's that one buyer that they're begging to buy their business. Whereas we wanna bring multiple buyers to the table. And honestly, it may not be the best price that they get, but they may really see the business succeeding with this new buyer. And again, those emotions come back. So we still wanna make it a fair deal for all parties, but it's good to have a variety of buyers out there that are interested. Also,

And probably the biggest thing is confidentiality. You know, we don't put a sign in your front window or yard or on our marketing websites. We're not going to say what type of business or we are going to say what type of business you are, but we're not going to say who you are. We're not going to put your street address out there. Confidentiality is huge because you don't want to lose your employees. You don't want to lose your customers. People do get a little weird when businesses are for sale and

Jennifer Kok (17:37.164)
Mm-hmm.

Jessica Starks (17:40.254)
You're gonna, as a seller, go through a lot through that process. You don't need your people to go through that same process. But just having somebody on your team, your team of advisors, you're still gonna need an accountant, an attorney, your wealth advisor. So there's so many people that come into play when selling your business.

Jennifer Kok (17:59.148)
You know, I remember a lot of fear when I decided to sell my cookie and cupcake business at 20 years that my staff would get wind of it before I was ready to communicate it and that they might leave. Because you're right, people are afraid of change or my customers even. you know, having that confidentiality piece is huge and it's very hard to run a business and navigate selling a business when you're doing it all yourself.

Jessica Starks (18:03.167)
Mm-hmm.

Jessica Starks (18:08.137)
Yeah.

Jessica Starks (18:20.885)
yes, because we need you as a seller to keep your business going as strong, if not stronger, through the process. And if you're trying to sell it on your own, it's, yeah, this is my full-time job. Like this is what I do for my clients. So it's definitely intense.

Jennifer Kok (18:33.774)
Good.

So tell us what's the trends been lately? businesses, I keep hearing statistics about entrepreneurship on the rise. Are those startups, are businesses transitioning pretty quickly? What's the picture look like this year?

Jessica Starks (18:49.969)
Yeah, so, you know, end of last year we had the election. So I saw things, you know, kind of pause for a little bit and then, you know, ramped up a little bit and then we had the holidays. And so, you know, things have been a little uncertain these days for people, but I feel spring has sprung and we're seeing a lot of activity with buyers, with sellers, know, tax time is over, you know, April 15th or March 15th and

They have their 24 numbers and we're rolling in with the 25. So things are definitely on the uptick for sure. But there was a little stall or lull in that process, but there's still people looking. Mm-hmm. Yes.

Jennifer Kok (19:27.852)
Well, understandably. Well, good. Good to know. Well, thank you for these really good tips. And if anything, just to kind of get business owners thinking about it, like you said, start with the end in mind. So you have two different businesses that you help people with. We talked about your business broker. You help them actually transaction the deal. Tell me a little bit more about exit strategy, exit factor.

Jessica Starks (19:46.718)
right?

Jessica Starks (19:50.046)
Exit factor, yeah. So exit factor, we want you to run a business better today so you can sell it when it needs to be sold tomorrow. So we want to make your business more profitable today. We want to make it less owner dependent, make more money today, have more freedom today. And that, we want you to run your business like that. And once you are ready to sell or need to sell, so again, what's in your control or what's out of your control,

There's a lot of things out of our control that you might need to sell tomorrow, so why not get your business ready? So we help our clients through that. consult them to get a well-ran business. And then we also do exit assessments. So you talk about business valuation. So we value the business. We look at a roadmap of how they're running the business, their growth plan, and where we can get their business if they make the right changes to their business of what their future value would be.

And so we put some key metrics in place and our goal is to give them a more sellable business to sell for more. And thus that just benefits them, their family, their community, employees, their customers. It's a trickle down effect.

Jennifer Kok (20:59.982)
That's great. you know, it's so true because in our minds today, we might think, I don't want to sell my business in the next year, but life happens. Something might happen. And so there's no harm in being prepared to go to market with it if you need to. So thank you so much for sharing your insights and just giving us some things to think about that most of us don't until it's sometimes it's too late. I will put links to connect with you in the show notes.

Jessica Starks (21:09.789)
Mm-hmm.

Right.

Jessica Starks (21:27.881)
Thanks so much for having me today.

Jennifer Kok (21:29.718)
It was great conversation. Thank you.

Jessica Starks (21:31.456)
Hey.