The Sale of Hawksnest & the Understanding the Landscape of Business Succession

Earlier this week, Lenny Cottom announced the sale of Hawksnest Snow Tubing & Zipline after 35-years of family ownership. Fortunately, this was part of the Cottom's plan, and they worked to find a buyer that shared their vision for the future of this long-time outdoor playground.

Business succession does not always go so smoothly, and sometimes a lack of planning can force the hand of a business owner in a way that has a negative impact on employees, customers, and the surrounding community.

On this week's Mind Your Business, we hear directly from Lenny Cottom about the sale of Hawksnest, what drove the family's decision, and what comes next for one of the High Country's longest running outdoor attractions. 

We then tackle the concept of business succession as we visit with Chris Grasinger and John Wilantowicz of Mountain BizWorks. We discuss how developing a plan around the sale of a business can help maximize the value of the return, and ensure employees and customers can continue to count on the goods and services provided. We'll also talk about the growing benefits of buying an established business versus starting a small business from scratch, and how that can factor positively into future financing, community positioning, and other similar considerations.

Mind Your Business is written and produced weekly by the Boone Area Chamber of Commerce. This podcast is made possible thanks to the sponsorship support of Appalachian Commercial Real Estate.

Catch the show each Thursday afternoon (except this week -- tune in Friday, April 10th) at 5PM on WATA (1450AM & 96.5FM) in Boone.

Transcript

SPEAKER_05 0:00

Every small business starts with longevity in mind, but not all are prepared to hand the baton to new ownership. We talk business transitions for those looking to sell and for those looking for a new, more solidified opportunity. From the Boon Area Chamber of Commerce, this is Mind Your Business.

SPEAKER_04 0:20

Mind Your Business brought to you by Appalachian Commercial Real Estate, providing professional commercial real estate services. Visit Appalachian CRE.com.

SPEAKER_05 0:31

Hello and welcome into Mind Your Business. I'm David Jackson, president and CEO of the Boone Area Chamber of Commerce. Thanks for joining us once again this week. Whether it's through the airwaves of WATA here in Boone or as a subscriber to the podcast version of this program, which is made possible each week by our friends at Appalachian Commercial Real Estate. If you are not yet a subscriber, this is a great time to remedy that. Just search for Mind Your Business wherever you get your podcasts. You can gain access to full archives, occasional bonus content, extended episodes, and plenty more. As we connect you with the business news that you can use from right here in the mountains of Western North Carolina. Everything costs more, so people are being a little bit more choosy with their purchases, and that shows up in our small business community both first and loudest. Small business owners often start with a seed idea, and they really never stop. Ideation quickly is followed by business creation. You cut the ribbons, start serving customers, and then you look up 10 years or more have passed. And while focusing on the day-to-day of establishing a business, the big picture things tend to get overlooked. I remember one of the byproducts of the COVID shutdown was business owners saying that closures actually helped them take time to contemplate what was next. And we saw unmatched growth as pandemic restrictions relaxed because entrepreneurs had time on their hands and they considered the next challenge and were ready to act when the gates opened. The flood response was a bit different. Yes, business interruption on a similar scale to some degree, but this time there were physical challenges, customer disruption, and layers of complications we are still dealing with today that have made the chase back to normal feel somewhat insurmountable. There has been no time to clear the mind. It's been more like survive in advance. And again, it's the big picture planning that suffers the most when those things occur. One of those plans that is often put off by a new business is how to get out, an exit strategy for the day you wish to hand the keys to someone else. Some businesses are started to sell, and there is a world where that happens. For most small businesses, a desire to hand off the business to a family member or a longtime employee is often the dream. But there is no planning to make that dream become reality. So the business becomes extremely vulnerable when aging ownership wants a change of pace and no one is in the queue to take over. That could lead to one person or one family's decision having an impact on dozens of jobs and taking niche industries out of a rural community. Good news here, it doesn't have to be this way. On this week's Mind Your Business, we're going to get a few birds with one stone. Earlier this week, Hawk's Nest Snow Tubing and Ziplines announced its sale to new ownership, ending a 35-year relationship for the Codham family. We will hear from Lenny Codham directly about what led to the sale, what it means for one of our legacy outdoor businesses, and what it will allow he and his family to do next. Spoiler alert, there was a plan involved here, and a 35-year ownership relationship will be handed off in a manner that sets up the business to flourish instead of flounder. Then we will talk with the team from Mountain Bizworks about the process of acquiring a business, what someone looking to sell their business needs to consider in terms of market valuation and timelines. But there's also an important trend shift happening that we'll discuss as well. And that's for all you budding entrepreneurs out there. The idea that buying a business that has baked-in credibility may be more financially advantageous than starting something from scratch. And the really interesting thing here is that business acquisition from the buyer side is much more attainable than you might think. We'll bring all of this to you while we also set the record straight related to the recent sale of Hawk's Nest. Stick around, maybe even grab a pen. We've got lots to cover. You are listening to mind your business.

SPEAKER_04 5:27

Appalachian Commercial Real Estate provides professional commercial real estate services in the Boone area. They provide sales, listing, consulting, and appraisal services to owners and users of commercial real estate. For more information, go to their website at Appalachian CRE.com.

SPEAKER_05 5:47

Welcome back to Mind Your Business. That's James Milner at Appalachian Commercial Real Estate. They solve simple and complex commercial real estate problems in and around the Boone area and beyond. Whether you own or lease commercial real estate, regardless of the property type, have an advocate on your side, along with the expertise and experience to assist you and your business. For more information, check them out on the web, AppalachianCRE.com. If you are the correct number of Boone years old, you have a hawk's nest story. It could be from the ski slopes back in the day. Maybe you were one of the first ones down the zip line, or the tubing run, or maybe you mastered the golf course. Now that takes it back, right? The largest business in Seven Devils has provided many an adventure to generations of customers over decades. And for Lenny Cottom and his family, it's been a labor of love for 35 years. Earlier this week, the Codams announced they have sold Hawk's Nest to a new group that has experience in the outdoor adventure world. As we do when these things happen in our community, we go right to the source to get the accurate story as to why this decision was made and what it means for Hawk's Nest moving forward.

SPEAKER_01 7:08

My name's Lenny Cottom, and I am from Hawk's Nest Snowtub and Zipline.

SPEAKER_05 7:12

So Hawk's Nest is part of the High Country Fabric, Lenny. I can remember many a day as a college student up on that mountain. And I know a lot of folks have uh similar stories. What's it been like to run uh uh an organization like this for three decades?

SPEAKER_01 7:30

Um, you know, it's it's been a lot of fun. There's a lot of great memories for something like that. And just like what you said, um I run into a lot of people that tell me the same thing. You know, I remember being up there and skiing when I was in college, or I met my future wife there, or you know, things like that. And it's always it's always a great thing to hear people say that about a place that you own and you've been involved with for 35 years, um, that people remember it, and it's just got an iconic place.

SPEAKER_05 8:01

You know, the the business has certainly evolved over time, you know, moving from the ski resort to zip lining and and snow tubing. What were some of the determining factors in that? And and you know, did it did it work out the way that you thought it would when you made those changes?

SPEAKER_01 8:15

Um we were trying to expand the ski area back in the uh mid-night mid to late 2000s, I guess, and the town didn't want us to do that. So we really needed to pivot because we were one of the smaller mountains um trying to compete with beet, sugar, and appalachian. And so we really needed to change to make that more uh sustainable model. You know, Hawks Nest had been in bankruptcy multiple times before we owned it, and we bought it out of bankruptcy. So we really, it was really a tough model to to try to sustain. And so we just decided to, you know, make an even bigger gamble and just go all in with the snow tubing. And it has worked out better than we could have ever had imagined that it would work out. You know, it made us more of a destination place or a forefront of people thinking we're gonna go there while we're in the mountains and not, you know, we'll go to Hawks Nest when it's overflow. So that was a big thing for us, and we, you know, eventually became one of the top five, probably size-wise tubing parks in the US. Um, and then moving away from the golf course, it's just the the water flow, just like Helene, this past, you know, two years ago, um, that water flow was just tearing the golf course up. Um, and we just couldn't afford to keep um repairing a golf course that was only open five, maybe six months a year to do that. So we just made the decision to close it. We went into the zip line just thinking, you know, let's try to keep some of our winter people around more and let's try this new zip line fat and see how it goes. And again, that worked out really well for us as well and became an iconic piece here, more of a destination place that people wanted to come to and do. So both those decisions worked out really well. We had lemons and we made lemonade out of it, and it worked out really well for us.

SPEAKER_05 10:17

Well, I feel like Lenny, you've been on the front end of this uh experiential nature of travel and tourism where where people, instead of just doing one thing, want to have multiple options. Um, you know, the decision on the tubing side, even even the zip line at the time when when that was installed was kind of a revolutionary thing to think about in the acreage that you were covering, at least in this part of the country. What led you to to have that mindset of cutting edge rather than reactive? I think a lot of people in business want to be innovative. You've done that. What what were the trade-offs and and uh and and what were some of the benefits to that that kind of thinking as it relates to this project?

SPEAKER_01 11:00

Well, we just tried to have something that was going on in the summertime that could bring in some income, at least just pay the bills a little bit, not necessarily even make a profit. Um, you know, when you run a business that only that only brings in income four months out of the year, those other those other eight months are tough. So we were just trying to have something that that did that, and Zipline was just starting at the time. And so we thought, you know, let's try it and see how it goes. We've got a beautiful piece of property to do it on. Um, the installers who did it, you know, they were like, this is a great piece of property for this, and it's become a great zipline. We added the second course, you know, two years later. So it's it's really worked out well for us to keep pushing that and making that experience. Um, people wanting to come to Hawk's Nest to experience those kind of thrills.

SPEAKER_05 11:54

So earlier this week you announced uh that that you would be selling uh the resort. And anytime that there's a family business that's changing hands here in the high country, we like to give the family an opportunity to tell the story rather than let the rumor mill take it over, right? So um kind of take us through that that process and and what you've what you've ultimately landed on in this decision.

SPEAKER_01 12:16

Um, you know, my family's been involved with HuffSNest for 35 years, and uh it's a seven-day a week proposition, 12 months a year now, it's all the time. And really we're we're farmers because we're always at the at the mercy of the weather. Um and so that's that's hard. And after 35 years of doing it, we you know, as I mentioned before, we brought it out of bankruptcy. It took a lot of years to get it in the right direction, and and it just got to be to where I I just wanted to do something else. It's you know, I I I don't want to spend all my life working, working, working for something and never really enjoy your life because you're working all the time. And it is a business that you really need to keep your eye on. And while I have excellent staff who do a lot of the frontline work, um you you still it's always on your mind that something's going on. And so uh I I came across this group and they are already doing a lot of the things that we are doing. They're doing the snow tube and they're doing the zipline, they have a campground, um, they have the white whitewater rafting and things. So they understand the business and they wanted to grow the business, they wanted to grow their business as well. Um, so it seemed like a good match. Um, I I I'm part of that new company as well, so I won't be completely gone from it. I'll still be here. But my day-to-day um job will be a lot less. It'll be more from 30,000 feet instead of ground zero. So um that's kind of where we got to. And it's it's been a family business for a long time, and when it's a family business, everything revolves around the family business. All vacations, all holidays. You know, uh I remember my kids still remember me getting up in the morning and on Christmas Day and opening up presents, and then daddy goes off to work. You know, so you know, that's that's tough on a family after a while. Um so that's just why I just turned 60 this year and I just decided to try something different and let somebody else who I thought would be a good match for it continue to push hotness forward.

SPEAKER_05 14:30

Lenny, you bring up a situation that is on the minds of many small business owners in this area. It's kind of like the what comes next after they do either exhaust the capacity to run the business or or like you said, you you're just ready to do something new. Uh, could you maybe offer up some of the things that you were looking for in the process as you were selecting someone to partner with? What mattered to you as you thought about handing off this 35-year legacy? What did you want to see out of that?

SPEAKER_01 15:01

I I wanted to see one, a track record. Um, you know, I've had people offered to buy it from us multiple times, but they were just people that didn't have, they were just looking for something they could make money with and not something that they could continue to expand and make this a destination piece. And I didn't want to be involved with that sort of thing. I didn't want to have all my hard work go for naught when I turn it over to somebody else, and and yeah, it's not mine anymore. But I still feel I'll always feel connected to it. Um, I don't wanted to see it go sideways. I wanted to continue to grow. I want it to continue to always be a gym. So these these new guys that came in, they have experience. They have experience in rec management, they have a lot of years of experience. So I knew they were gonna bring something to the table that was more than just um the average person trying to buy something from me. Plus, they had a lot of money behind them. So that makes a big, a big difference as well. I didn't want to sell it to somebody who was financing themselves up to their neck and were gonna have a hard time making ends meet. Uh, I didn't want to do that to my staff. I didn't want to do that to the community because even though I'm I'm not there anymore, um, I'll still be reflect, it'll still be re reflected on me. You know, John Reynolds, we bought the Hofst Nest from John Reynolds years ago, and people still associate John Reynolds with Hobsonist. Um, and rightfully so, he had it for a long time as well. And so it's just an iconic piece, and I I wanted to do right by it. I wanted to do right by the community, to leave it in good hands. Um, and hopefully I've done that.

SPEAKER_05 16:42

Have you thought much yet about what that transition will feel like when you go from the the guy that had all the answers and all the authority to being the institutional memory, I'm sure, in in a lot of regards, but but also being able to help this new ownership group um understand some of the why behind how you built this business the way you did and and the connections with the customers that you have.

SPEAKER_01 17:03

Um well, like I said before, I'm gonna keep part of the ownership of this new company. So I'll still have my hands in it, some, I'll still be able to be reached all the time to continue to help it go forward. Um granted, my voice will be a smaller voice now, but I they would be, you know, I've got a lot of experience in this area and in this business, and they need to still lean on that to make sure we keep it going in the right direction. So that's why I wanted to stay involved, um, at least on the outskirts to make sure that it continues to go in the right direction. So you know, the day after we closed on it, I still went to work the next morning. So it felt like nothing changed to me. And this morning before I talked to you, I was doing doing work. So, you know, I'm still trying to transition away from that a little bit, but it's it's after all these years, it's hard to not get up and that's the first thing you want to do. So it's been a little bit difficult for that for me and for my family, but we're gonna, we hopefully we put it in a good good hands is the best that we could do. And it'll go forward and we'll try to help steer it as much as we can.

SPEAKER_05 18:11

Well, certainly uh as you as you reflect and and kind of change that that version of your roles and responsibilities, I'm sure you've also thought back to a lot of the memories made over the last 35 years, staff members, the the returning customers, I'm sure multiple generations of customers now that you've been able to see. What will you take with you from this experience as as the transition continues?

SPEAKER_01 18:33

You know, I I've tried to be the kind of person through the years that um that when people worked for me, they also liked me. I would do everything with them. Um I wasn't a guy that would sit in the office and just you know tell people what to do and not get down there in the trenches with them. I've done everything there is to do on that on that mountain. I groomed, I've made snow, I've I've zipline guide, I've done everything. So I've always felt connection to the people that were my frontline people. And it's it's it's amazing. I guess I've been in the business too long because I've had people that have worked for me back in the 90s, and I've now hired some of their kids when they're in college to work for us as well. So, you know, that's great that their parents worked for us and they wanted their kids to come and work there and have that experience too. You know, I have people come up all the time and they just want to walk around the building. Um, so it's great to see old friends, it's great to see them come back with their with their kids or with their wives. Um, that's the thing I'll take away. Um, and as as well as so many happy memories, you know, I'm um people leaving and they're smiling and they're saying that was so much fun. And um or the or the the kids that are five and six years old and they're crying because they don't want to leave. Um, those are great memories too. And I'll I'll always cherish that, and that's what we've always strived for is for people leaving smiling thing. That was great. That was so much fun to do things together with our family. It's such a family-oriented business to where you come with your family and do things with them. You meet with other family and friends you haven't seen in a while, and you do that with them. And it's uh it's a bonding experience, and it's and I think that's why people come back year after year and why people remember it. And that's what I'll take away from everything.

SPEAKER_05 20:24

Well, Lenny, I'll I'll tell you some of us 40-year-olds uh also are close to tears by the time we we it it's time to leave as well. It's one of those kind of places. And uh just as we close this up, I just want to thank you over the years, not only for for what you've meant to the community and what your business has meant, but also for your voice. Um, I know you've been a longtime member of the Tourism Development Authority. Uh, you have uh you were one of the lead voices back during COVID when everybody was trying to figure out exactly how to operate uh outdoor businesses, and and you were one of the trusted voices during that that time and so many others. So we appreciate your leadership and wish you nothing but the best as you get a chance to have a day off uh one of these days. Not not yet, but not one of these days. Um but but certainly uh thank you for the memories and thank you for putting this in a position to be left in in hands that are going to carry on what you and your family have built. That that means a lot to folks, and it will mean a lot as time moves on for sure.

SPEAKER_01 21:23

Well, I appreciate it. I I thank you. If I can do something for you, please let me know. I'll be around.

SPEAKER_05 21:28

For those of you chamber members out there, a full press release from the Codham family is available for you to read in this week's chamber report, and perhaps tonight would be a great night to reflect on your favorite hawk's nest moment, especially now that we know that Lenny and his family will be connected and invested in what comes next. So the Codoms had a plan. They sought a partner and they handed the business off in a way they could feel comfortable with the outcome. Who helps with these types of transactions and what incentives are out there for those selling businesses? As well as those buying them. We check in with our friends at Mountain Bizworks on the topic of business acquisitions and how they can provide stability for all involved. Stay tuned if you are listening to Mind Your Business.

SPEAKER_04 22:12

Appalachian Commercial Real Estate provides professional commercial real estate services in the Boone area. They provide sales, leasing, consulting, and appraisal services to owners and users of commercial real estate. For more information, go to their website at Appalachian CRE.com.

SPEAKER_05 22:30

Welcome back to Mind Your Business. I'm David Jackson. We heard before the break about a successful business transition, a sale outside the family by a family business that was looking for a change. When businesses have these plans in place, transactions can be a lot more smooth when it's time to hand over the keys. When succession plans are not in place, sometimes an untimely accident or just an owner that's had enough means uncertainty for the rest of the folks involved with the business and any customers that may be counting on those services. As we said earlier, it's not like business owners have a ton of time to think about three, five, 10-year plans, but there are trusted local voices that can help make the idea of buying or selling a business feel a bit more attainable. We caught up with two of those voices earlier this week.

SPEAKER_03 23:16

Hey there. I'm Chris Graysinger with Mountain Bizworks. I'm the director of Market Advisors, which is our succession-focused line of business at Mountain Bizworks. And I'm also the High Country Regional Manager.

SPEAKER_02 23:29

And I'm John Milantowitz. I'm a business succession and growth analyst at Mountain Bizworks with the Market Advisors team.

SPEAKER_05 23:35

It is great to be joined by you guys and appreciate everything that Mountain Bisworks has been doing in our market, not only lately with Helene Recovery and helping businesses, but just in general, some of our most tried and true small businesses have some sort of Mountain Bizworks DNA involved in their creation or their sustainment. So we we appreciate everything that you do there. We just heard a few minutes ago on the podcast from Lenny Cottham, uh Lenny, longtime business owner here in the high country with Hawk's Nest, 35 years in the business. And he spoke very candidly about what it was that that led his family to decide this is the time to get out. It brings up this conversation, Chris, that we've had recently about different options that are available for businesses that are looking to move on to the next thing, maybe retire, maybe just stop coming to work every day. And also this growing number of people that are looking for an acquisition and bringing these two things together under the mountain Bizworks roof. I know that you've been very active. So maybe you can kind of level set for us. What does the business acquisition market look like in the high country right now for both sellers and buyers?

SPEAKER_03 24:49

Absolutely. Thanks, David. We really appreciate the time you're giving us to connect with the community through this platform and all of the support that we've had from the Boon Chamber over the years. Just to set the stage, throw out a couple stats. So in Western North Carolina, which we define as the 26th most western counties, 60% of small businesses are owned by baby boomers, which we're loosely defining as 55 plus, uh age 55 plus. Three in five, three out of five of those hope to retire in the decade ahead. And four out of five have no defined exit strategy. Okay. So that second one is folks that don't have retirement in mind, but they just never defined what their exit strategy is. And that's not a bad thing, and it is the norm, as you can see just through those numbers. But what we're looking at as a financial institution, a small business support provider, and through the lens of the chamber, economic development, all the stakeholders of our local economies, the risks keep coming. And this is one that also has a beautiful other side of the coin of one of the biggest opportunities that we have. And that is to encourage our current small business owners that are in those you know, loosely defined baby boomer demographics to really consider what it looks like to exit. And does that mean selling to an employee? Does it mean marketing your business for sale? What is that value range going to be? What do you need it to be? Do you want to sell it? If you don't, why not? All of these are valid positions. We at our organization and now many of our other economic support organizations are gearing up to try to really foster an environment in Western North Carolina where we stand out on a regional and even national scale of promoting successful business transition.

SPEAKER_05 26:54

Perhaps both of you can answer this question. You know, when you look at the entrepreneurial side of things, you know, there, there you can go to any coffee shop in town and find the next person that's out there dreaming up their next great business idea, right? What is the balance between start it on your own and start from scratch, or maybe purchase something that's got some track record behind it and and maybe is a little farther along than certainly the fresh out-of-the-ven idea? What are the advantages to having something with with some history versus starting brand new?

SPEAKER_03 27:31

It's really in the eye of the beholder. It's a great question. For me, just speaking from experience, I was blessed with the opportunity to open up a climbing gym and fitness center in Boone called Center 45 10 years ago. It took us two years of business planning, taking on a major investor and acquiring an SBA loan. And at the age of 28, launching this thing and just hoping if we build it, they will come. And you know, 10 years later, we're still here. We're so thankful for it. That was about four years, including the two planning and um tooth and nail years of putting all the assets together to launch the thing, and the two years after it, of what I would call a very painful time. So worth it. We were driven by passion and you know, really blessed with the ability to eventually become somewhat profitable. We're kind of capped there, but you know, it was all worth it. And there was not a climbing gem already in Wataga, which we could acquire. So there are so many circumstances like that when you're starting something new within your community, and that's what you're fully focused on for one reason or several reasons with yourself or your partners. On the other hand, a lot of folks want to enter business ownership in a more general way. They're not totally agnostic, but they might have a couple industries that they're looking at. In those scenarios, if that thing, if that entity, enterprise type is already existing in your community or an adjacent community, we're really promoting taking a look. It's a stone or still several stones worth looking under if you're planning on starting a business or becoming an entrepreneur anyway, right? And so there's a couple reasons behind that. I'm gonna start with maybe the most important one from a business analysis perspective, which is fundability. A lender of any kind, whether they're gonna be funding your startup or your acquisition or your growth, wants to see historical profitability. And if you're acquiring a business that has historical profitability, it is a much easier story to define to the funders that are supporting you, and it's easier for them to underwrite and and fund. The other one is existing brand, existing community presence. And if that PR and that presence is already good, you're not having to build that from scratch either. So a customer base that's ready and waiting to engage with you, something you're familiar with, a lot less mystery. And there's more benefits to it than that that kind of go macro, like keeping jobs in the community, um, etc. But those are kind of the top two. And so this time in our nation's history is the biggest transition we're ever gonna see, I think, in our lifetime of small business. So 10 years ago, if we were having this conversation, David, my answer might be a little different, but right now it's such a huge wave of opportunity. I'm encouraging anybody, whether they're trying to start a business or grow a business, to look at acquisition as part of that strategy.

SPEAKER_02 30:55

The only thing I really have to add there is that I think that acquisition is a much easier entry point into your entrepreneurship career, um, your entrepreneurship journey. Just because in a startup, you there's you're gonna learn a lot of your lessons through, you know, blood, sweat, and tears, learning those lessons the hard way. Um through a lot of the deal structures that are involved in acquisition, you once you step into the door of that new business, um you are gonna have a lot of opportunity to interact with that previous business owner that's been doing it for the last 30 years and already has gone through those hard knocks and learned those lessons.

SPEAKER_05 31:35

It's great that you bring that up. That was one of the things that Lenny really highlighted was the opportunity for him to stay engaged with the business to help a new owner uh kind of ease into a community, uh, even though they've already got industry experience. So that is certainly a benefit. You know, Chris, I know that we have talked before, and I know that we uh both of our organizations talk regularly with people, as you mentioned a few moments ago, that don't necessarily have the exit in mind. They know they want to get out at some point in time, and that may be age-related, that may be just place in life related. But to think about how you spin down something that has been your life's work can be just as challenging as actually spinning it down. What are some of the things that you encourage people that are maybe looking for a strategy, even if that means five, 10 years down the road? What are the easiest ways to start the strategy of beginning to think how you exit a small business?

SPEAKER_03 32:31

That's that's such a great point. And one of my mentors, Jeff McKeon from Viking Merger and Acquisition, a really strong broker that's out there that covers the Western North Carolina region. He likes to on the front end create the energy around selling that the founder had when they were starting it. It's almost like you're going through that process again or starting another business. You have to put a lot of focus on it and find that time. And sometimes it takes a while to design the time in to approach the sale of your business as strategically as you did the start of it. But I love how he describes that. And John, on this call, we were just talking about your team, right? What is your cadre? What is that group of people and resource providers, supporters, advisors that is gonna help you get ready to sell and execute on the sale and know how to use the funding that you received or train the individual that comes after the sale. And so we do promote the use of a business broker or advisor, if you have one, in mind or in your region that comes recommended, and you have to interview them just like you interview anybody else that you're bringing into your circle. Your CPA is going to be critical in the input of how everything is structured, as well as an attorney who has been through a business sale and acquisition before. Those are really helpful first steps to getting into it and also starting to look into what kind of range of value you could demand in the marketplace right now if you were to take that business. What would the price or like range of prices that you could put out there for what you have right now? And how do you build that towards when you're actually going to start marketing it yourself?

SPEAKER_05 34:31

More with Chris and John right after this. You are listening to Mind Your Business.

SPEAKER_00 34:36

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SPEAKER_05 35:35

It's a relationship centric engagement. So when our friends are starting something up or closing something down, we tend to have an emotional response to our friends in the process of starting up or letting go close with a lot of baggage and items to consider. We continue our conversation with Chris and Jen from Mountain Biz Works as we attempt to demystify the process of business acquisition. When you start talking about valuation, I think everybody sees their business, their baby, if you will, through one set of lenses and maybe a little bit aspirational even toward the end of its its lifespan. But for those that you just mentioned that are executing that sale, what lens do they look at a business in in terms of its valuation and what consideration should a selling business have about what they're really worth versus what they hope they're worth?

SPEAKER_03 36:29

This is maybe the hardest part of what John and I do, which is bringing a seller, an existing business to the reality of the scenario. A business is worth what somebody is willing to pay for it. And fortunately or unfortunately, that range can be huge depending on who's looking at acquiring you. So the average buyer is somebody that's you know maybe a competitor that's looking to grow through acquisition, but even more likely right now is somebody who has saved up some money through a career in corporate, perhaps, and they're looking to enter a system that is developed enough for them to come in and function as the owner while that business they purchase continues to kick back a salary for them every year and operate business as usual, and maybe even has room to grow. And so if you have some gaps there in what that typical buyer is looking for, that's going to bring the value of your business down. On the other hand, there might be five buyers out there in the country that would buy your business for the top value where your mind is, but you have to figure out as the business owner how you're going to get in front of those opportunities and market yourself to them. So we like to start with what the average sale looks like based on the data that we have from all over the country and in our region, and then look at the low end and look at the high end of value. And we do that through what's we call an internal valuation analysis. It's a mix between getting your business valued and a coaching and strategy um engagement. It takes us about a month. We get your historicals, we talk about what's possible in the future, and it's been a really healthy tip of the spear for a lot of the advisory work that we're doing. There are softwares now that can help you with that. And there are other business professionals that can do that kind of work with you. If you're going to get a certified valuation, which is a very different thing from what we do, a certified valuation can stand up in court in divorce or partnership dispute situations. That is going to generate a number for you or a couple different numbers on what that valuation range could be. But a lot of times you have to be careful because it might not be grounded in reality. It's a function to play into a legal situation, not a transaction in the marketplace. So we try to draw those lines between the functionality of those two different types of value because most likely what's going to happen is somebody's going to buy your business, they're going to put down 10 to 20% of the price of the business in their cash, their savings that they saved up through corporate or whatever it might be. And they're going to go out and they're going to borrow 80 to 90% of the money they need from an SBA loan. And we like to paint that picture because when you can see through the eyes of your most likely buyers, that's when you start to win and really hone in on that number that you're going to go to market with and see if it fits for your situation.

SPEAKER_05 39:39

John, I would imagine that there are some emotions attached to this part of it. How do you help people stay rooted a little bit and what they're trying to achieve, no matter how the roller coaster tends to ride during the process?

SPEAKER_02 39:53

That's definitely the most difficult part of our whole situation is uh telling business owners that, hey, maybe your business isn't realistically worth as much as you think it is. Um a lot of it is just keeping keeping them grounded in what is realistically financeable. Um, because if we're going to market asking for something that is very difficult to find a buyer for, um it's you know, you're not gonna find you're gonna not gonna be leaving money on the table, you're gonna be leaving everything on the table. Um and that's really the most important thing is do you want there to be uh a reasonable pathway for you forward to have your business continue into the future, maintain your legacy, um, or are you just gonna let it collapse for the sake of a little bit of extra money?

SPEAKER_05 40:49

Yeah, and and I would imagine that there are some, I mean, we've seen evidence of it here in this community that that are people that may just want to sell the decision making, right? They they still would like to work in the business on a daily basis. Is is that maybe kind of the gateway to uh a lesser charged emotional situation where you can orchestrate through acquisition the opportunity to still exist within the business?

SPEAKER_02 41:14

Absolutely. Um, and there are plenty of, I feel like a lot of the business owners that we interact with in Western North Carolina are more interested in bettering their community rather than the biggest paycheck, which is a blessing for Chris and myself to deal with all these people. Um, but there are also a ton of, we just mentioned earlier, the industrial commons. There are plenty of opportunities to stay involved with your business, but transition into an employee ownership model. So you can still go to work every day with those same people, but also enrich your employees and your community as well. Um, so there are really plenty of opportunities there.

SPEAKER_05 41:51

In the in the few minutes we've got left here, Chris, I'll come back to you for this one uh from a timeline perspective. If somebody's driving around right now listening to this, saying, hey, you know what, been thinking about this for a while, maybe this is what I need to consider from the time that you begin to get organized, whether you're selling or buying, what does that timeline look like right now in in terms of getting the keys or handing off the keys and and and uh getting to the next chapter?

SPEAKER_03 42:17

Yeah, we really encourage folks to reach out to us. It's mountainbizworks.org and we're listed on the chamber website. I'm Chris at mountainbizworks.org. It's John W at Mountainbizworks.org. Really having that conversation is going to create a specific uh personalized depiction of timeline. Generally speaking, talk to somebody now. If you have any interest in thinking through your exit, even if it's five years out, go ahead and talk to somebody, right? There's a lot of resources around this right now, probably more than ever, in assisting sellers because of what I said earlier, the economic risk and opportunity that we have. So when you dial in timeline, you're looking at a couple things. How long would it take for me to get to the price I want to demand in the marketplace? And what is my minimum? If you can get to that answer, you've taken a huge step. And sometimes that means getting your partners on board too, which is can be a heavy lift depending on the scenario. After that, how am I going to work with these advisors to start to market or identify a buyer? A lot of times they're right under your nose. It is a supplier, a customer, an employee. We see this over and over. It's amazing how many employee purchases we've seen, and that's not going to a cooperative or ESAP model, just one or two key employees buying the business they've been working in and care about. We're seeing a ton of that right now, David. And then closing, right? There has to be Usually an appraisal done of the business by whatever financial institution is involved. That financial institution has to underwrite the acquisition. And then you gotta work with an attorney to put together all the fun legal use and paperwork involved to make sure the buyer and seller are protected and after the fail. So all in all, I like to reference a six-month minimum. I know that might be jarring for some people, but to do it right, you gotta take time, right? All good things take time. We've seen acquisitions take up to a year and a half, and that's usually in scenarios where it takes some time to cultivate a qualified buyer. And that does happen, but if you have a business that's cash flowing right now and you're trying to exit, generally speaking, your buyer is gonna be out there, you're gonna identify them fairly quickly. There's no shortage of good buyers in our market. There's a shortage of businesses that are prepared to sell.

SPEAKER_05 44:59

Guys, we we certainly appreciate the time. Hopefully, this has given some people a good place to start this thought. And uh certainly we'll we'll share the contact information for Mountain Bizworks in the show notes and make sure that folks have access to that. Uh, but we appreciate you all being a trusted local resource for this conversation, and and hopefully uh we'll continue to see local decisions be made like this with people that are down the street that you can talk to on a daily basis and and feel good about this this type of transaction, one way or the other, at the end of it all. So thank you for what you do, and we we look forward to catching up with you again soon. Absolutely.

SPEAKER_02 45:34

Thank you for having us.

SPEAKER_05 45:36

Mountainbizworks.org is the place to get connected with Chris and John. Make sure you check out the full suite of business support resources, access to capital, and other items that Mountain Bizworks can provide. And also remember this whether you are starting your business, looking for one to buy to move an idea forward, or winding a business down, one thing is for certain you do not have to go through it alone. We'll come back and put a bow on this episode right after this. You are listening to Mind Your Business. We have no shortage of engagements over the next week or so here in Chamberland, so keep up to date with our whereabouts at BoonCamber.com. We look forward to seeing you all in business after hours next week at the Spectral Trout Outfitters in downtown Boone. That's 5 o'clock to 7 on Thursday. RSVP while you still can. You may have to cap this one as well due to space. Boonchamber.com. That's the place to do that business. And see if there are any other conversations that we have going on you might want to get involved with while you're at it. That does it for this episode of MindYour Business. This program is written and produced each week by the Boone Area Chamber of Commerce. Thanks to WATA for putting us back on the airwaves each and every week. If you are not a subscriber to the podcast, make sure you do it. Subscribe now wherever you get such content. You can also visit us online anytime at Boonechamber.com. Until next week, so along everybody.