Monkey Business Radio

Valuing Your Small Business IP

• American Gutter Monkeys, LLC • Season 1 • Episode 8

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In this episode of Monkey Business Radio, Chris and Dennis dig into one of the most overlooked assets in small business—intellectual property (IP). From brand reputation and trade secrets to goodwill and systems, your IP might just be the most valuable line on your balance sheet.

They share real stories—like how AGM built its IP from scratch, why owning vs. leasing real estate changes everything, and how iconic brands like Jordan’s Furniture and Ken’s Steakhouse show the power of strong branding.

Whether you’re a home service operator or aspiring franchisee, this episode will change how you look at your business value.

Chris:

Hello everyone, welcome to Monkey Business Radio, episode 8, valuing your Small Business IP. I'm Chris Collins and today we're diving into a topic that most business owners don't think enough about intellectual property or IP. Running a home service business, a retail shop or a franchise like American Gutter Monkeys, your intellectual property, your branding, trade secrets and your business systems can add serious value to your company. So let's dive in. As always, I'm here with Dennis Siggins. Hello Dennis, chris, how you doing? Buddy, I'm doing pretty well Good good good.

Chris:

Yep, all's good, all's good. Yeah, I'm excited for this one. Most business owners focus so much on revenue and assets you know things that they can touch but they don't really realize that the real gold in their business is stuff you can't see like your brand, your reputation.

Dennis:

Last week we talked about the balance sheet and half the balance sheet is the assets, and we talked about three types of assets last week Current assets, which is cash, accounts, receivables, prepaid expenses. Then there's fixed assets, which is your hard assets, your building, your trucks, your inventory tools and equipment. And then the intellectual property. That's the big variable. We're talking about trademarks, patents, service marks, goodwill Goodwill being your name and reputation in the local and regional community. The intellectual property, or what we call IP, is the big variable in the balance sheet equation and today we're going to focus in on intellectual property. Sounds good. That's where we want to start A startup.

Dennis:

You're starting up your new business. You got a pickup truck, two lawnmowers and a string trimmer, but you're a startup, so you don't have any intellectual property. There's no goodwill yet. You haven't cut a lawn, you haven't done any amount of business yet. So when you're a startup, a startup has no intellectual property. There's no brand, there's no goodwill in the community. On the balance sheet, the startup has no IP value, just current and fixed assets, only your truck, your lawnmowers, your string trimmer and the bank account. Those are your assets. The intellectual property is at a zero. But down the road. The intellectual property is very likely to outgrow the value of the current and fixed assets, and we're going to talk more about that in just a little bit of time.

Chris:

Yeah, when I first came to this, started getting involved with American Gutter Monkeys, started looking at balance sheets. I don't have a business background and this really blew me away.

Dennis:

Today, somebody in my office asked for the balance sheet. He needed it because of legal purposes for some of the work that we do, and I tend to keep all that stuff on my desk. I build the balance sheets every year. I update them that's one of my jobs here in the office, so I just emailed it over to him and we moved on. I keep a lot of that data in my office on my desktop because it's very important.

Dennis:

A lot of people might ask why do we need to value our business? Why do I need to know what it's worth? Why do I really care what the balance sheet says? I'm making plenty of money and the number one reason is for internal purposes. So we use the balance sheet, which gives us the balance, the value of our company, on a specific date. Annually, I use January 4th. So I, just a couple of weeks ago, updated my balance sheet For internal purposes. We use it for year-to-year comparisons for the owner or the manager how to assess business value, growth, risk forecasting and other strategic processes. It also helps if you're applying for financing, a bank loan or anything like that. A current business valuation, a currently updated asset-based balance sheet, is a great tool to have. If you're determining the value of the company so you can sell stock or take on a partner who wants to buy in, or if you're planning an exit strategy you're planning on retiring or selling your company in the next two to three years. You want to have a good idea as to what it's worth.

Chris:

All right. So my experience was with American gutter monkeys coming in trying to figure out what the value was when we were discussing it, and this is where I kind of got exposed to it. This IP, especially for American gutter monkeys and especially your company, Cape Cod gutter monkeys, has a very, very strong IP component to it. Of course. Your Bobby Downspout, all your marketing, your radio ads, your Goodwill and things like that in the Cape Cod Islands community, so he had a very strong IP component.

Dennis:

And the reason we have that is as all the reasons that we talked about. But here's something that occurs two or three times a year in my world when you own a company and you start to hit certain strike points, you break a million dollars up over two or three million dollars, you start to gain market share. You also, whether you like it or not, are gaining the attention of investment groups, venture capitalists and other people in the business world, and we probably have two or three of these people who contact us every year. Now, currently we're really not that interested in selling, but we always have a discussion If somebody wants to talk about business valuation and maybe talk to us, maybe make an offer. Something like that. That occurs, that does happen in our world.

Dennis:

Because I have a balance sheet with a perpetually updated value, I can weed through the pretenders, and most of them are pretenders. I can weed through them in five minutes because I know what my company's worth and I know how to break out the intellectual property versus the fixed assets, versus the current assets. Because I have that at my fingertips, I don't have to waste a whole lot of time with venture capitalists. The first one or two times that I got these calls, I'm kind of flattered. Wow, this person that manages a portfolio of $100 million is considering making an offer on my company. The beautiful thing is, if you have a current valuation, an asset-based balance sheet, you can cut right to the chase and you know if they're a pretender or not. Let's speculate, chris. We're in the food service industry, the home service industry, contractor-based model automotive technology companies, health exercise companies. There's a whole lot of different models out there and they're all valued using different methods.

Chris:

Yeah, so I come from the high-tech world, so the number one thing, of course, is patents. That's the big thing, huge In the tech world, but it's very different. As we started preparing for this podcast and you start going through all this. It's a very, very different animal.

Dennis:

In the home service business, which is a little bit of my world right now, we don't have patents. I'm a commodity. When I was in, I used to own a restaurant. When I was in the restaurant world, all I had was the name of the company and my reputation, and there's nothing patentable much at all. In the food service world. It's hard to patent recipes. You can keep them a secret, make them somewhat proprietary, but it's hard to patent them. So what are the factors that are going to impact the value of your IP? Number one is revenue. Revenue is produced by the business and the revenue that the company produces is indicative as to how well a local or regional community respects this business. If you're a $5 million a year company and all your other competitors are in the $300,000 to $600,000 range, you're the big dog in that neighborhood and your intellectual property will reflect that on the balance sheet.

Dennis:

Let's take the food service company. We're a restaurant. It's likely that we don't have any patents. So our trademark name, our service mark name, that's our IP, our local and regional goodwill. That's going to be our intellectual property, our domain name, our website property, our domain name, our website phone numbers, reputation. Basically, that's all we have. If I'm the burger place and we produce burgers, that's a commodity. Mcdonald's, burger King, wendy's, they're all selling the same thing. It's just they each have their own secret sauce, so to speak. What is the secret sauce at your restaurant or our restaurant that we own? That's a hard one to say right here and now because we're only speculating. But we're a restaurant, we're serving food. Maybe I'm a Mexican restaurant, maybe I'm a burger restaurant, but that's my take on the food. Basically, food is a commodity.

Dennis:

So what we use is multiples of gross sales or pre-tax profit. That's how we determine the intellectual property. That's one of the biggest components of determining the value of the intellectual property a multiple of gross sales or a multiple of EBITDA, e-b-i-t-d-a earnings before interest, taxes, depreciation, amortization let's just call it pre-tax profit. So if we take a multiple of gross sales in a commodity business home service, restaurants you're likely going to fall into the one half X to five X, based upon X being annual sales. So if you are a restaurant and you're doing $2 million a year in sales, you know your value is going to be somewhere between half that and five times that. So your value is going to be somewhere between a million and 10 million. That's a big window. Yeah, it's huge. So what are the factors we use? That's a big range, that's a big window 1 million to 10 million. What are the factors that are going to determine where your value is.

Chris:

McDonald's is a good example here. I mean, they've trademarked their logos, their colors, that they use Everything imaginable.

Dennis:

You don't see a.

Chris:

McDonald's going under? No, you never do. And they all look the same because they all have that same trademarked look. So for a company like that, they're way up on that 5X, I'm sure even more, but that would be the far end.

Dennis:

But let's look at the small local restaurant. One of the first questions I ask is do you the owner of the restaurant, do you own your own real estate or do you lease it? Let's talk about leasing. How much time is left on the lease?

Dennis:

That's interesting, because if you're running a restaurant and you're doing $2.2 million a year but you only have one year left on the lease, who's going to buy that? Right? That's interesting, that's a big one, right there. Or if there's only a year left on the lease, the purchaser of that restaurant is going to want to sign an extension, maybe a 10-year extension to that lease. That would rebuild the IP value. But if there's only one year left on that lease, there's not a whole lot of intellectual property there, because the value could all come to an end in one year. Interesting example Sure, what about if we own the real estate?

Dennis:

So if we lease the real estate and there's a good, stable, solid lease in place, your restaurant's going to probably land in the 1X to 2 to 3X, x being gross annual sales. But what if you own the real estate and that comes with it? So X all of a sudden takes on a different number because you're not only purchasing the business but you're purchasing the real estate. You now control the lease, you are the owner of the property. That intellectual property just took a big jump. That's going to move into the 2X to 5X range.

Chris:

So besides just owning the property once you say, purchase the restaurant, it also allows you to go into business much faster because you have the building. That's a huge value If it's an already going concern. Yeah.

Dennis:

If the business is operating. You're doing $2 million a year selling burgers and you're buying the real estate. It's a double whammy. But what about owning the real estate? What are the limitations? You have two restaurants. Let's say they're in the same town and you're both selling burgers and you're both grossing $2.2 million a year. One restaurant leases the space at the mall and one restaurant is located on a property that is owned by the restaurant owner. You know you're leasing at the mall Again, depending on the conditions of the lease.

Dennis:

How much time is left? What are the limitations and benefits of the lease? How much time is left? What are the limitations and benefits of the lease? What is the likelihood of extending the lease? What if the lease is almost over and you got to pull the restaurant out of there and move it somewhere else? Forget it. There is no more IP, the cost of moving it and you lose all your foot traffic. But what about the real estate based restaurant, where the owner of the restaurant also owns the real estate and he's selling the same $2.2 million a year in burgers? What room for growth does he have? Is he maxed out on his number of seats? Is he maxed out on his parking, or does he have room with the current real estate as it is to grow to $3 million, $5 million? Is there room to grow that's going to impact the IP value? Are there any limitations? Is there zoning through the town or the city? Are there physical limitations? These are the questions that need to be answered that will give you a true value of your IP.

Chris:

Yeah well, it's getting ready for this podcast. And just the other day I was talking to my mom. You'll remember this place we're Framingham boys, so Framingham Mass boys, so La Cantina.

Dennis:

Know it well.

Chris:

We just had my mother's 90th birthday.

Dennis:

11 months ago, I had my mom's 90th birthday at La Cantina.

Chris:

So this is a classic example. What made me just think of this now is that parking area. I don't know if you remember. Across the street, remember there's a bunch of dilapidated buildings they bought that land knocked that down. They have an enormous parking lot.

Dennis:

When did they do?

Chris:

that, oh, it was years and years ago. Okay, all right, there's an enormous parking lot there, yeah, and we were just in there the other night and it made me think of that, but La Quintina and Framingham, yep, but talk about a location, even if you pick up that building like they were to sell it and the family never, probably will ever, 50 years probably. At least Everybody in town knows.

Dennis:

Everybody knows it.

Chris:

Talk about goodwill. Standing in your neighborhood parking the whole nine yards. They've got it all. Amazing business. Not only that, but they have a retail spaghetti sauce as well that they sell. Do?

Dennis:

they really yeah, talk about a trademark yeah. How about Ken's, ken's Ken's Steakhouse down on Route 9. Yeah, Still there. Yeah, that's been there probably since the 40s, yeah, and their salad dressing is worth way more than the rest. Everybody knows.

Chris:

Ken's salad dressing. Oh yeah, sure, sure, it's in every supermarket. Yeah, and that salad dressing started in the restaurant and again they marketed it.

Dennis:

Yeah, ken's salad dressing is a brand. That's all about the IP. That's all about the IP. Yeah, probably the most recognizable salad dressing line in the country.

Chris:

Yeah, probably Wouldn't you say yeah, easily, easily.

Dennis:

Yeah, so kind of wrapping it up on the restaurant thing. There's a lot of variables and there's no one correct answer to valuing your IP. But don't fool yourself. For internal purposes, when you do your balance sheet, be honest about the intellectual property. Talk to a specialist in the field, talk to a consultant, Find out what a good, honest valuation method is and stick with that every year so you have a consistent format that you're using year after year and that will allow you a good view of your business where you are in relationship to where you were yesterday, relationship to where you were yesterday and the year before and the year before, and it also gives you an idea as to where you're headed.

Chris:

Yeah, or where you should be heading if you haven't done anything in that space. You know, if you haven't been concerned about these different IP issues, you haven't been aware of them. Maybe it's time to start thinking about them.

Dennis:

A lot of home service companies the landscaper, cleaning services, the handyman, home repair type business, the painters, a lot of these. They can start out of the owner's home. I mean, how many people I've done that myself on a number of occasions. I've had multi-million dollar a year companies I started out of my garage. Now they didn't stay in the garage. Pretty soon you outgrow that physical space that you're in. But home service companies are an interesting group because home service companies could be a one or two-person operation or they could be a 30 or 40 or 50-person operation and you've got everything in between. And how do we value that? And there's methods to valuing that. If you're a home-based service company and you're operating out of your garage think about that You're going to have a little bit of on the lower side. You're going to be at one half X, simply because the value of your company is attached to the fact that it's operating out of your garage and if a buyer is going to come along and buy your company, he can't buy your garage too.

Dennis:

He's going to have to extract the company out of your garage and move it to the local industrial park or maybe even move it to his own home, his own garage. But there's a process to that, there's a journey to that. So the home-based operation is going to have a lower end intellectual property, maybe one half X. So if you're doing a half a million dollars in sales, maybe your IP is going to be a quarter million. But the other question too, chris, is are you, the owner of that company, required to be there or the company will fail?

Chris:

Yeah, that's right. Yeah, there's Michael Gerber. He's a small business writer. Came up with this quote If your business can't run without you, you don't own a business, you own a job, and there's a certain amount of truth to that and there's nothing wrong with that. Nope, no, a lot of people.

Dennis:

My brother-in-law ran a handyman service and he designed it to be a one-person company and he surrounded himself with an electrician, a plumber, an extra carpenter, a laborer every now and again and whenever he needed an extra pair of hands to hang a door or build a deck. I actually built a couple of decks with him. My brother-in-law, mandy, designed a one-man company because that's what he wanted. Other home-based operators land there by default. They started growing their company when they were younger. They hit their mid to late 30s. Things weren't developing the way they wanted, so they reel it back in a little bit and they end up running a one or two-person operation, still as a home-based, out of their own garage.

Dennis:

Like I say nothing wrong or right about any one of them, it's just a fact. That's what it is a home-based company, but you're going to have a lower-end intellectual property value. A potential buyer doesn't know if he purchases that company. Do the employees come with it because we're moving to another town or another location? There's a lot of variables. But if you take that same company and he leases a space down at the local industrial park, first of all he's probably going to have a little more elbow room, a little more room for growth. That company is going to grow a little bit. Thus it's going to have a higher IP value, not only because maybe it has higher sales, but it's also going to probably move up into the 1X you know, one times annual sales, because a new owner can purchase that and take over the lease.

Dennis:

But again, chris, now we get back into what are the conditions of the lease, right, right, then of course there's the business home service company. Maybe you're a landscaper and you own a 4,000 square foot building down at the local industrial park and you got 20 parking spaces. You're a good sized company. So you're going to trade or you're going to sell, maybe in the 2 to 4 or 5x range, plus the value of the real estate. The intellectual property increases and to that you add the value of the real estate and all of your trucks and tools and equipment. But the IP is a whole lot higher because owning the real estate takes the biggest variable out of the equation. It removes the lease. It's a much cleaner operation.

Chris:

A couple of other ideas behind that as well is that if you own a building, like I'm here at the Cape Cod Gutter Monkeys headquarters it's a beautiful building. Your employees must love this building. It's got break rooms, bathrooms, huge area to work out. You've got a workout room. I mean that adds a lot of value. Again, it's sort of a goodwill in terms of your employees. Your employees love it here. Plus, you're in a community, so you've got some goodwill. You've got signs out front. You have all those things that a home-based business wouldn't have because they're tucked away in a neighborhood. Your employees are parking on your lawn or whatever that sort of thing, so it doesn't have that same sort of community reputation, goodwill amongst your employees, even A really piece of the puzzle that Andy and I developed way back in the beginning was just me and Andy.

Dennis:

We just said we want our company to be the coolest company to work for. I've had these kind of companies before where you build a culture. We always have a pool table. I've always had a pool table. We have a beautiful pool table over in the main room and the guys come in after work. They shoot pool. Some of the guys come in in the morning and they'll hit the weight room. We have a really nice gym here. But yeah, that's one of the things that we always wanted was we wanted a good culture. We wanted this to be like a family and that helps to draw good employees in and it helps to retain employees. I guess in a way that probably helps build our IP too.

Chris:

I got to think it does. I mean, if I'm walking in here and I'm looking around, I've pretty much got a pretty good idea of how your employees feel about working here, you know. So they take a huge load off my mind if I'm coming in and wondering am I going to be able to retain the people that you're leaving behind?

Dennis:

Well, retention of employees is huge. Yeah, it really is a big part of the overall picture sale, I got to imagine.

Dennis:

So taking an overall view of valuation of your business, in particular today, the intellectual property. To kind of wrap this all up, is that again, you're going to hear me say it week after week, I say it all the time. Some people go to where the puck is. I want to go to where the puck is going to be when I get there. What does that mean? That means look far out over the horizon, see where you want to be, see the future and be there when it arrives. Don't wait till you need a bank loan for a new facility, let's say, before putting your balance sheet together. Don't wait till you're burnt out and you want to sell your property or you want to sell your company.

Chris:

Have your balance sheet completed long before that happens and kind of review this as you go down the pike, because your situation is going to change. You're either going to become more interested in growing the business or maybe you're going to step aside, maybe you want to bring in your kids or something like that. So it's this thing you've got to kind of review every single year, like you talk about with your assets and your balance sheet every single year going through it. There's a great story about Jordan's Furniture. I don't know if again Framingham Elliot and Barry Actually Waltham.

Chris:

Yeah, Waltham, yeah.

Dennis:

Yeah, they were on Moody Street in Waltham.

Chris:

Yeah, yeah. But interesting story about one of the brothers decided about halfway through he was going to retire. Barry, barry, actually now he's on Broadway, he's a Broadway producer.

Dennis:

Elliot lives over here in Marsden's Mills. Oh does he? He does. He lives on the Cape. We'll have to have him on the show, and he sees him in the supermarket once in a while. Let's get him on the show.

Chris:

Yeah boy, so they sold. They actually ended up selling to Berkshire Hathaway. Right yeah, they did. So you can imagine their goodwill.

Dennis:

I don't know if you're familiar with Jordan's Furniture.

Chris:

I mean, Jordan's is everything. Just amazing amount of goodwill. Not only is it a furniture company, it's also they put an IMAX theater in a couple of their buildings and things like that. So they have all that going on. What was their multiplier for their IP for that company? It's just incredible.

Dennis:

They defined sleep comfort. Right A comfort, yeah, right, yeah. A mattress was just a flat, soft thing we used to sleep on back in the sixties and seventies and when Elliot and Barry took over their mom and dad's operation, they started branding themselves as professional sleep consultants and it changed the game. Yeah, yeah, those guys are. They got a screw loose. I actually studied their business model heavily before we started the gutter monkeys.

Chris:

Oh really.

Dennis:

Yeah, yeah, because I went to Bentley College, which is a mile down the road from Jordan's Furniture, and I was a cross-country runner. I ran past that building a thousand times over my four years at Bentley and we passed them all the time and they always had fun. Yeah, yeah, they used to ride donkeys to work once in a while and we pass them all the time and they always had fun. They used to ride donkeys to work once in a while and tie them up out front to a hitching post. They did crazy stuff like that. I knew an office manager or one of the department managers there one time and she used to tell me some of the craziest stuff they do. They just had a good time.

Chris:

They had a great culture at work and we loved it when the kids were growing up because they'd always go in there. I don't know if you're familiar with them, but they'd always have food. They had their Mardi Gras thing.

Dennis:

At the.

Chris:

IMAX yeah, the one in Framingham.

Dennis:

The one in Framingham Holy cow.

Chris:

They had a food mall. It was attached to a nice. There was Riley's Roast Beef there, but it made it so kid-friendly loved it. There was all sorts of things. They got beads as they came in the door. They're huge in the community. They give away free bicycles, they do all this other sort of stuff. Yeah, I mean it's like the perfect example of the IP. You could do a whole show, I guess, on Jordan Marsh and their IP. I guess.

Dennis:

A quick little thought on intellectual property. So my partner Andy and I we started the Gutter Monkeys 10 years, 11 years ago, and it was just an idea. We were two old guys in our 50s and we were going to do something different in our semi-retirement years and when we started out we owned one truck. It was a 10-year-old truck and we owned about a half a dozen ladders and we had a bank account. I think we each put eight grand in there or something. We had no intellectual property. We had no IP value zero. The value of our company was a 10-year-old truck and a bank account with about 15 grand. That's it. As the company grew and we started to gain traction and build our name and our philosophy here in Cape Cod, the intellectual property grew. But in the beginning there was really only one piece of value and it was the fixed assets, basically a truck and some equipment. By year two we had a second little piece of value and that was the bank account. The intellectual property really wasn't worth anything yet. We were only a year or two old, we were doing well, we had good revenue. But one or two years in the marketplace does not build a brand. But over the years, the brand caught fire. It began to grow. In fact, even before we started I said to Andy I want to be like Elliot and Barry, I want to be iconic. That was one of my goals to be like Elliot and Barry Jordan. And I'd say about year four or five I felt like we were reaching that status. Everyone knew who we were. Business was booming and going back to the very beginning day one, our assets included a truck, some ladders and a $15,000 bank account. That's it. Our IP was worth zero.

Dennis:

As we grow, the intellectual property component of our balance sheet is much bigger than anything else. We have good cash, good receivables, prepaid expenses. We got a good, solid group of current assets. Our fixed assets are solid. We have about 15 trucks, tons of ladders, tools, equipment, office computers, cubicles, all kinds of stuff. Our fixed assets is very, very strong.

Dennis:

But the real value is the intellectual property. In fact, my piece of real estate here is very valuable. It's a brand new building. We just built it a couple of years ago Very, very beautiful building. We're real proud of it. But the intellectual property of our name, of our company name, dwarfs all those other three and that's the real value.

Dennis:

This is why venture capitalists just call us out of the blue and they want to come over. They want to take us out to lunch and they want to see what we're doing and how we're doing it. And they want to come over. They want to take us out to lunch and they want to see what we're doing and how we're doing it and they want to discuss potentially buying us. We're not really interested in selling right now, but we always entertain the thought and we take the free lunch when they take us out to lunch.

Dennis:

But they're not calling me because of my building. They're not calling me because of my fleet of trucks and we own about about 100 or I don't know how many ladders we own out there. They're not calling me because I have $250,000 worth of inventory. That's not why they're calling me. They're calling me because of our intellectual property. They're calling us because the name that we've branded over these last 10 and a half years is now hitting their radar. That is what a good IP value will do, and when they start calling you, you know you're getting in the neighborhood.

Chris:

Yeah, and it takes a while to build up, like your assets and things like that. Like if there was a flood here tomorrow and you lost your trucks, you could replace the trucks within weeks or months.

Dennis:

Yeah, take a month.

Chris:

But your IP that's taking you 10, 15 years to build up. It takes a while to build up, but it's hugely valuable. Of course, the flip side of that too is your protection of your IP as well, Because of course flip side of that is if you damage your reputation or you damage your IP of some sort, it's very harmful to your business as well. But yeah, it's an interesting aspect to it.

Dennis:

So way back in the beginning I mentioned very quickly that the IP, the intellectual property of your business, has a very high likelihood of being the most valuable asset on your balance sheet. And if you treat it right, if you respect the value, if you respect the intellectual property, your company can and will grow to where the intellectual property that nothing but air. You can't grab it, you can't hold it, but you know it's there. That may very well be the biggest line item on your balance sheet and it is for me. Yeah, it's amazing.

Chris:

That's our biggest line item by far, for as big as this operation is, the buildings, the trucks, the personnel, the people you have here. It's amazing. Do you remember the?

Dennis:

Natick Mall, sure, the old one, sure, my parents in 1959, which was the year I was born, moved to Framingham and the reason they moved there was because the Mass Pike was building the first exit and it was the Framingham Natick exit was building the first exit and it was the Framingham Natick exit. So my dad, who was a sales rep for a company out of Milwaukee, my dad, could hop right on the Mass Pike, get into Boston and take advantage of the airport and all the other things that the city had to offer. Yet we lived out in the boonies Framingham was the boonies back then and they built the Natick Mall in about 1962 or three I was very, very little and years later, maybe in around the year 2000, they tore the mall down and built the new one, which is two stories and it's much bigger and has more bells and whistles. But when I was growing up, joe the barber, joe Buscemi, he owned Joe's Barbershop and they probably had six or eight chairs and there was always at least five or six or seven barbers in there cutting hair and there was never a break in the action. That place was a revenue generating machine. Probably on average they had six barbers in there. I used to know them all.

Dennis:

Mr Buscemi was a teammate of mine, my college teammate, joe Buscemi Jr. He was a fellow Bentley College runner. That's how I got to know Mr Buscemi. We really became good buddies over the years. He was an Italian immigrant and Joe also owned a small one or two seat barbershop over in Cachituet, which is in the town of Wayland, not too far from the Natick Mall. So Mr Buscemi originally owned three, but eventually he owned two barbershops, a little one or two seater over in Cotituit and he owned the building. And then he had this money generating machine called Joe's Barbershop over at the Natick Mall and they were going to tear the mall down in the late 90s over at the Natick Mall. And they were going to tear the mall down in the late 90s and they didn't want Joe to be in the mall, this old school, crusty, old, rugged Italian immigrant, and he didn't fit the new model.

Chris:

They wanted a younger guy, maybe with a couple of ladies cutting hair and it wasn't the fit.

Dennis:

Yeah, the franchise haircut place, right, exactly the pro cuts or whatever. They were looking more like that and I remember I was an adult with three kids and three kids that were growing at the time and I knew a little bit about business by then and the mall was going to get torn down in about a year and a half or two and they didn't want Joe to come back. What do you think is the value of his intellectual property at this point? Zero, this money-generating machine, this machine that made him a wealthy man. It was a ticking time bomb that was going to explode a year and a half from now when they tore them all down and they didn't want him back in. So upon his exit, he walked away with little to nothing other than probably 25 or 30 great years of revenue. Mm-hmm, and I don't know for sure, but I strongly suspect Mr Buscemi made some pretty good money when he sold that building over in Cotituit with the one or two seat barbershop in it. Yeah, because he owned the real estate. He'd owned it for a long time, got it cheap, yep, and he had a good reputation in the community. I remember that barbershop. I know exactly where it was. It's probably still there today. So there's an interesting perspective. It's not necessarily the revenue generating capacity, although that's a really important part of intellectual property, but leased versus owned and the conditions of each Interesting story. I'm sure Mr Buscemi is looking down on us. Boy, he was a good egg. He really liked my wife and I. He was a good egg. But profitability versus business valuation Interesting perspective there.

Dennis:

I want to just throw out two other little things. Chris, one time I bought a failed business. I was a young kid I was about 22 at the time and I was in the roofing business but I bought this other failed business carpet and upholstery cleaning. The business had gone under. The owner heard his back. He was just selling the assets and the biggest asset, I believe, looking back, was the customer list. I purchased everything two portable rug cleaning machines, a bunch of apparatus and a customer list for $3,000. And the two machines at the time were probably worth $5,000 combined. He just wanted them out. It was a home base. He wanted his garage cleaned out and what did I know? I purchased them. I set it up and it became one of two businesses that I owned and operated at the time, and not for nothing.

Dennis:

About four or five years later we were flipping a lot of houses and we had a couple of businesses that we had bought, resurrected and sold and that business sold for about $50,000. It was home base and I purchased it for three grand. He just wanted to get rid of it. I sold it when we were growing. I was in my fourth or fifth year. It was growing every year. It was time to move on because I had purchased another larger operation that I really needed to shed these two smaller businesses that I owned. And I got nothing for my roofing business because roofing is just a commodity, I really didn't have too much to offer, but Northeast Carpet. I put it out to a business broker and he got me about 49 or 50 grand. He took his cut of the action and I walked away with like 42 or $45,000 because of the customer list.

Chris:

Yeah, Cause you probably didn't grow the business that much in terms of trucks or employees and things like that. It doesn't sound like it. So it was all the.

Dennis:

it was still a one truck and the original equipment, plus another one or two pieces that I bought along the way. But when I sold it it was quick, it was clean. The reason we got 49 or 50 grand back then is because we had a set of books, we had recurring annual business, we had repeat customers. It says a lot, that little story from holy cow 45, 40 plus years ago. It says a lot about intellectual property. I didn't even know the term intellectual property at the time.

Chris:

Yeah, yeah, but it was in effect, it was working, even though you didn't know, it was there, yeah absolutely yeah, there you have it, okay.

Dennis:

Intellectual property 101.

Chris:

Yeah, a lot to it. It's an interesting subject. If you don't know much about it, learn more because, as we said, it has a big effect on your bottom line.

Dennis:

A lot of information out there on that. Yeah, so take a look at that. All right, we wrap it up. I think we're done for today. No monkeys were harmed in the making of this podcast. All right, we'll see you next time.

Chris:

Thank you for tuning in to Monkey Business Radio. Thank you for tuning in to Monkey Business Radio. If you enjoyed today's episode, please make sure to subscribe, like and follow us wherever you get your podcasts. It really helps us reach more aspiring entrepreneurs like you, and if you've got a question or topic you'd like us to cover, leave a comment or reach out to us on social media. We'd love to hear your thoughts and keep the conversation going. Don't forget to leave us a five-star review if you found the episode valuable, and make sure to share it with anyone who might benefit from our tips and stories. We'll see you next time. This podcast is produced by American Gutter Monkeys LLC. Build real wealth through business ownership. For details, visit us at AmericanGutterMonkeyscom.