Jessica Fialkovich with Exit Factor

Intro: Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me. Now here’s your host.

Stone Payton: Welcome to another exciting and informative edition of Buy a Business Near Me. Stone Payton here with you. Please join me in welcoming to the broadcast with Exit Factor, Ms. Jessica Fialkovich. How are you?

Jessica Fialkovich: I’m great stone, I’m so happy to be here with you today.

Stone Payton: It is a delight to have you on the air. I know it’s been in the planning for some time. I got a ton of questions. Jessica. I know we won’t get to them all, but maybe a great place to start would be if you could paint for me and our listeners, kind of an overview, mission, purpose. What a what are you and your team really out there trying to do for folks?

Jessica Fialkovich: Yeah, no, I’d be happy to share. So at Exit Factor, our mission is to improve the profitability and the operations of businesses so the owners can have more time, money and freedom currently, but also to make sure their position for the last phase of entrepreneurship, the exit phase, and ensure that they have the ability to sell and that they sell for top dollar.

Stone Payton: It sounds like noble and rewarding work to me if you can get it, but I got to know the backstory. How did you find yourself doing this kind of work for these kind of people?

Jessica Fialkovich: Yeah, no, it’s a great question. So, you know, the real back story goes all the way back to actually my grandparents. Um, so my grandfather had a chain of pharmacies and was a very successful business owner and entrepreneur. Um, but unfortunately, he waited too long to prepare for the sale of his company, um, and really didn’t see the trend in the pharmacy world of, like, the Cvs’s and the eckerd’s coming in and absorbing a lot of the market share. So instead of being able to sell his business, he actually had to to close it down. Um, so it’s kind of like my origin story. Fast forward to, you know, I’m a young 24 year old first time entrepreneur starting and founding my own company. Um, and about three years into that journey, I find myself at the same situation where for different reasons and purposes, we have to sell the company, and I’m unprepared to do so. Um, so really, I keep coming back to this theme in my life and, and ended up going into mergers and acquisitions and owning a business brokerage firm for over a decade or so. But but really, about a few years ago, I decided, you know, really what I want to focus on is making sure that business owners have the preparation so they can get the maximum dollar on their exit for this thing that they’ve invested, you know, sometimes years, decades into, um, when it comes time to sell the business.

Stone Payton: Well, now that you’ve been at this a while and you clearly have what what are you finding the most rewarding? What’s the most fun about it for you?

Jessica Fialkovich: So I really think it’s working on the goals actually. So it’s so funny. Like we we talk a lot about the end of, you know, getting getting more money for people and getting businesses to sell that probably wouldn’t have sold before we worked with them. That’s rewarding. But I think the most fun part is working on the upfront, the goals. A lot of business owners don’t know if they’re going to sell or how they’re going to do it or when they’re going to do it. And I feel like as humans, we we tend to push off the future. Um, I heard this term recently into what I called like the rolling five, right? Where somebody asks you, when are you going to sell your business, or when are you going to work on that big goal? And you’ll say, you know, it’s in five years from now? Um, and then, you know, next year you ask the same question and we say five years from now, right. It’s the rolling five. So really the biggest benefit for me is helping people really hone in on what does that next phase of their life look like after the business. And, you know, coming up with a timeline, coming up with some goal sale prices and some metrics and really solidifying that future plan.

Stone Payton: Well, let’s talk about the work a little bit. And I’m a business owner or I own 40% of the business radio network, my business partner Lee Kantor owns the other 6,060%. And I got to tell you, I, I’m intimidated really a little bit about this conversation. I don’t even feel like I know what questions to be asking or what what levers to be pulling, much less when to start. You know, turning those dials and pulling those levers. Yeah. Talk a little bit about the work particularly. I’m particularly interested in the, in the, in the early part. Like what you know, what do we do first.

Jessica Fialkovich: Yeah, it’s a great question. And you know what, Stone? I feel like all of us as entrepreneurs aren’t well educated in this phase, right? A lot of the schools and resources we look at, they provide great education on how to start a business, how to grow a business. But this last phase of exit is a complete unknown. Um, and so I think for to start, the best thing to do is to just have an assessment done on your business. We call them exit assessments. You can have business valuations done. But really what we’re we’re looking at trying to do is figure out where is the business today, what’s working in the business and what’s working well. And you know what what’s not operating very well or may need a little bit of even an operation. Right. Um, and I think that’s the first start is just having an outside perspective of, of what is this company worth from a financial asset perspective? Um, and I found that there’s and we can talk about this. There’s a few buckets or a few levers that you can pull in every business. But the individual tactics within those levers are different for every company, which makes this work so interesting, because it’s like putting together a new recipe book every single time to figure out what are these magic factors that make a business so much more valuable, not just to the future owner, but the current owner too.

Stone Payton: So I feel like I’m probably just self-aware enough to recognize that Lee and I probably think this thing of ours is worth a lot more than it is. Do you ever run into that?

Jessica Fialkovich: Yes. Unfortunately, that’s most of the conversations we have. It’s funny because we either when we talk to business owners, they either think the company is not worth anything at all, and they’re usually wrong. Right? Almost every company has some value to it, even the very small ones. Or um, most of the conversations are they think it’s more valuable than it is. And, um, I think that’s switching that mindset of when we’ve built something and you hear this analogy all the time, like when we’ve built something like a business, we do have a personal connection to it. We feel like it’s a our baby, an extension of ourselves. And when you put a value on something that’s that important to you, you tend to overvalue it, right? Right. Um, but if you take a step back and you say that a business really is just a financial asset, and when you look at the value of a financial asset, you usually look at things like ROI and market value. And just like you would a stock. Right. So it’s typically when we have that conversation about switching the perspective that those value expectations come more in line with the market. But also I see this almost like rebirthing of the business owners of, of like, oh yes, this is what it is. It’s not an extension of my identity. It’s just a financial asset. And as a financial asset, it should be doing things for me, um, in terms of producing that time, money and freedom.

Stone Payton: So are there some non-financial factors that do have some merit, as you’re kind of laying all this out for a client?

Jessica Fialkovich: Yeah, yeah, there are. So I call it, you know, there’s a quantitative portion, which is the numbers, the earnings, what the business produces. But there are also qualitative factors and a business that’s going to improve its value. So some of those buckets of those qualitative factors that that we identify is, you know, the operations of the business, the people in the business, the owner’s role. Those are are really important in the qualitative assessment of a business. And then like the growth opportunities of a business to I say all the time, no one wants to buy a business and just keep it stagnant. Right? Every every new owner wants to grow a business that they buy. So if there’s established growth opportunities within a business or a market that will drive value to. So again we’re looking at, you know, processes people owners role. And then the growth opportunities are some of the buckets that we see that drive those qualitative factors as well.

Stone Payton: Yeah. So it sounds like we can we can attach some real value to that. And maybe maybe some of these things we’re not even we take them for granted because they’ve been, you know, really well baked for a while. And it’s just part of our ethos and part of our thing. But that could be that could really be valuable to the next person.

Jessica Fialkovich: Yes. Yes. I mean, like, look, when say, well, let’s say we’ll take a plumbing company, for example. And there could be two plumbing companies that do 500,000 in revenue, throw off 100,000 in net profit for the owner. You know what makes one more valuable than the other? If the numbers are the same, it’s those qualitative factors. It’s the brand history. It’s the people that work for them. It’s the processes they’ve built within it. That’s really what your differentiators are.

Stone Payton: So for exit factor, what? How does the whole sales and marketing thing work for a practice like yours? Like, do you find yourself getting out and shaking the bushes and marketing, or are you with so many years in it now, or does it come to you through referrals? I’m always curious how the whole sales side of things works for business.

Jessica Fialkovich: Yeah, yeah, that’s a great question. I think, you know, this is a definitely an emerging field. Um, so it’s not like we have people that are just sitting there googling, you know, find me an exit consultant. Right. Um, there are some, but there’s not a lot, um, primarily a lot of our, um, lead and sales generation is through, uh, partnership partnerships and, uh, partnership development. So typically when a business owner is starting to explore these conversations, they’re going to have conversations with certain people in their lives, their trusted advisors. Um, and we have a network of those trusted advisors that will come to us when they know that they have a client that’s in need.

Stone Payton: So I touched on this a little while ago, but I would like to get your insight and perspective on it. And maybe the answer is different and it’s very idiosyncratic. But timeline, you know, I shared with you, you know, my business partner and I, we have a good it’s a good, fun, profitable business. I mean, how far out do we need to start thinking about these things and planning? Are we talking about a year, five years?

Jessica Fialkovich: Yeah. It’s actually, um, that’s a great question. And sometimes one of the myths I remove from people is the need to have this timeline because. Unfortunately, 95% of businesses business owners sell before they think they’re going to. And we we talked a little bit about like a business as an extension of us. But as a small business owner, our personal lives impact the business too. So most business owners sell for personal reasons. Um, the number one reason for sale is burnout. Um. Or mental distress? Um, but business owners sell for illness, relocation opportunities. Um, you know, retirement. Those are those are those are things that we typically maybe retirement we can plan for, but typically we don’t plan for. Right? So that being said, I tell people that the best case scenario is that you run your business like it can be sold at any time. There is no timeline, right? Um, but if someone says, okay, well, that’s great, but I want to have a plan in place too. You need, at a bare minimum, three years ahead. Um, usually five is the best. So when you go to sell a company, when the buyer looks at the valuation of the company, they’re going to look at the weighted average of the last three years of performance of the business. Right. So from a numbers perspective and even an operations perspective, you can’t just have one great year and expect to exit at a premium value. You have to have three years of proven history that this business is consistent over time. Um, so that’s where I go bare minimum three better practices, probably five.

Stone Payton: I am so glad that I asked, because I it’s helpful to, to understand that, that that part of the timeline and it just sounds like really good, solid counsel. Uh, run your business so that you could sell it. Yeah. It reminds me of getting some advice about recruiting, and I forget where I got it about. You should always be recruiting. You should, you know, don’t. Don’t wait till you gotta put a, uh, somebody in that, uh, in that seat. I also feel like. And I don’t know if it was another interview or if I read it, but it seemed like a very sobering stat to me that, you know, something like, you know, eight out of ten businesses end up not selling. Is it because they don’t team up with someone like you or. Well, a is that true? Am I remembering that right? And if so, why? Why?

Jessica Fialkovich: Yeah, that that is true. So it’s actually more than eight out of ten businesses in the US end up closing their doors instead of having some type of exit or transition to the new ownership. Um, and it’s not really, you know, it’s it’s great if they team up with exit factor, but it’s really about they’re not planning in advance and they’re not running their business like they can sell it at any time. Um, so like I mentioned, this isn’t like something where you can just pull a few levers and then six months later, sell the company. It doesn’t work like that, right? Um, and so what ends up happening is that those eight out of ten that have to end up closing their doors didn’t do any pre-preparation in advance, um, to position their company like it could be sold. And so when they get to that life event that I talked about and they can’t go on owning the business, um, really the only option they have is to try and fire sale it. And most of the time that doesn’t work out.

Stone Payton: All right. So going kind of back to the I come from the training consulting world a long, long time ago when I had something closer to a real job and I would call it an engagement cycle. So there’s the early work of identifying things, doing this, this exit assessment, and particularly if someone kind of buys into this mindset of get the business ready to run it so that you could sell it, then you just hang in there with them and then help them look for opportunities. Or where does your thing start and end, if I could ask?

Jessica Fialkovich: Yeah. So once we have an exit assessment, um, done on a company that gives us that magic recipe that I was talking about, like, how do you maximize value for this company? Right. Um, and typically when we do that, we’re evaluating about 62 different factors of a company. So typically in any business we’ll say, all right. Of those 6240 things need work in this company. Right. And I find if you give an owner that much work, it’s very overwhelming and nothing gets done. So what our consulting does is we break we break those 40 items down, prioritize them with the owner, and we start systematically improving them one at a time over the course of the relationship.

Stone Payton: So I like it. So it strikes me, I guess I was coming into this conversation and I’ve interviewed business brokers before too, but I was coming into this conversation, even though I knew that you had this consulting practice with the idea that your work was far more transactional, it doesn’t sound like that to me at all. It sounds like the work you do, the trust that you must have to cultivate, and the it must be so heavily grounded in, in relationship. I mean, these folks have to trust you. You got to get to know them. It’s a it really is much more of a relationship oriented enterprise. And I guess I anticipated is that accurate?

Jessica Fialkovich: Yeah. That is really the very accurate. Yes. Um, we will work with clients like typically our consultants are working with clients an average of two years. Um, so we really get to know their business as well, their personal goals. Well, and, um, just, you know, it is it is a relationship business and helping guide them through not just this phase of working with us and improving the value, but typically when our relationship ends, we’re going to hand them off to the right people to execute that exit. So it might be a business broker, or it might be if they decide to sell to employees, just a lender and some and some lawyers to get the deal done. Um, but really helping them guide through what that next phase looks like.

Stone Payton: So early on. And particularly you must see some of the same. It’s probably unfair to call it pathology, but but some of the same mistakes or challenges like you almost always know I know we’re going to be doing these five things. Yeah, yeah. Are there some of those more common mistakes I guess we’ll call them.

Jessica Fialkovich: Yeah. There’s definitely so you know, I’d say really the top three, um, that we see in almost every business and it’s not all businesses, but almost every um is there is one is there’s a value expectations gap. And we talked about that a little bit about, you know, perceived value versus real value in the marketplace. So there’s usually some work we have to do around that more a mindset shift than actual, you know, physical tactical work. Um, the second is focus on the numbers and financial records of a business. I have yet to see a business that has perfect financial records. Um, lots of them usually need a lot of sprucing up, um, before they are positioned well for an exit. So we usually do some work around there. And then the third is really around that owner’s role, and the owner being able to let go and delegate and elevate their employees and their team. So the business becomes about the company and not about the owner.

Stone Payton: Boy, I have a feeling that if and when we were to become a client, I think that that letting go would be the stone oriented workshop. That’s a personal challenge for me. It has been, and even trying to lead teams, you know.

Jessica Fialkovich: I know me too. You know, it’s always a challenge. Again, it’s it’s something that starts as an extension of us. Right. And there’s, there’s so much of our personal identity tied up into it and it’s hard to let go. Um, but there is I know I’ve done this myself, too. There’s a lot of freedom in making that transition.

Stone Payton: So have you had. I know the answer to this has to be yes, but I’d like to dive into it for a minute anyway. Uh, but what I wanted to ask is, have you had the benefit of one or more mentors along the way, as you’ve continued to, to hone your craft?

Jessica Fialkovich: Yes, yes, actually, I’ve, I’ve three key mentors that I talk about a lot. They’re all entrepreneurs. Um, you know, two of them are, are business partners, um, at this point. So I’m very lucky in that regard. But, um, Ray Titus, who’s the CEO of United Franchise Group, has really guided my journey as an owner. Um, same with Andy Kenyatta, who. Was a CEO of Transworld Business Advisors. He’s also my co-host on my podcast, The Deal Board, and then also Heidi Ganahl, who was the founder of Camp Bow Wow. Um, so I have the pleasure of, like, I still work closely with all three of them. I’m in business with Rei and Andy, but all three of them have given me a different perspective on business. That’s been helpful. But also, you know how business you balance it with your life, too.

Stone Payton: Yeah. And I don’t know how you find the balance. You’re an author, you’re a speaker. You’ve got your you’ve got your own radio show. So what’s the tell me a little bit about your radio show.

Jessica Fialkovich: Oh, yeah. So, um, The Deal Board is a podcast about behind the scenes of what goes on, um, in the mergers and acquisitions world, specifically for small to mid market companies. Um, and Andy kinda and I started the deal board about four years ago, um, and have consistently been doing podcasts every other week, just about doing that, pulling behind the curtain. What actually happens in these mergers and acquisitions deals and how do they get done? How do they get financed? Who buys the companies and a whole other host of topics?

Stone Payton: Well, and I would think that such an important aspect of your work is to you really do need to educate to a certain degree before you can consult. Right? So so they even have a frame of reference for the for the topic. So I would think that would be a marvelous resource for potential clients and and and existing clients.

Jessica Fialkovich: Yeah, you’re right. It is a balance of education and consulting. So um, in X-Factor two, we actually have a full online curriculum, um, that our clients have access to because, you know, we might in a consulting session, we might drop some acronym or specialty term that we don’t have time to go through in that consulting session or it’s not, you know, a good use of the time together. Um, but we want our clients to be fully educated, too. So we have a full online curriculum that supports all the consulting work.

Stone Payton: Fantastic. Okay. Like I said, I, I don’t know when or how you would find the time, but I am interested to know passions, interests, pursuits outside the scope of your work. I, uh, a lot of our listeners know that I like to hunt, fish and travel. Yeah. Uh, yeah. Uh, do you have a tendency to nerd out about anything, or do you even have the time?

Jessica Fialkovich: So, yeah. So I mean, right now, um, you know, most of my time spent on building our business, I also have a two and a half year old son. Um, so, you know, we’re very busy at home, but I’m a huge, um, Bruce Springsteen fan, so anyone who knows me knows that when Bruce is touring, I’m a complete nerd. And, um, we’ll be on a plane to see him. Typically somewhere between 7 to 10 shows a year. Um, I’m actually getting on a plane to go to Dublin, Ireland on Friday. Um, so I can go see him play in Dublin. My first time seeing him play in Ireland with my sisters. Um, but that is that’s my one thing I geek out over. I’ve, I think I’ve been to over 70 shows at this point in my life.

Stone Payton: Fascinating. I am so glad that I asked. All right, before we wrap, I’d love to if we could leave our listeners with a couple of actionable pro tips. Something to be reading, something to be doing, not doing. And listen. Gang, the number one pro tip is reach out to to Jessica or someone on her team and just have a substantive conversation with them, and we’ll make sure we get some contact info for them here in just a moment. Uh, but yeah, maybe a couple of actionable tips we could leave them with.

Jessica Fialkovich: Yeah, I would say, look, everybody asks what’s the first step? And I think the first step is having an exit assessment or a business assessment done on the company, and it shows you where you’re at today and where you’re going in the future. Um, it also, if anyone’s interested, I did write a book on the topic called Getting the Most for Selling Your Business, which dives into kind of those qualitative areas that we talked a little bit about as well.

Stone Payton: Okay, I was going to wrap, but now we can’t I got to hear about this book. I, uh, I the contents of the book I’d like to hear a little bit about, but I’m interested in what was it like, you know, committing your ideas to, to paper. Was that an arduous, uh, set of task or did it come together pretty easily for you?

Jessica Fialkovich: Um, you know what? I think I had a good basis, so we had already written the online curriculum for Exit Factor before I wrote the book, so I had some good basis of my ideas. I also, I give full credit. I had an amazing, uh, coauthor that really did the legwork of taking my ideas and formulating it into a book format. Um, we did calls every week together on zoom to talk about stories that we’re going to infuse into the book. So, you know, start to finish, I’d say it was about a six month process. Um, and it wasn’t arduous or painful. It was actually quite enjoyable.

Stone Payton: Did you find that, uh, investing the time and energy to do that and put that work together? Did you find that? Sure. It’s it definitely. I’m sure it’s serving other people, but it it also help you kind of solidify, crystallize your own thinking and make. You that much more effective in your consulting work?

Jessica Fialkovich: Yeah, definitely. I think there was some focus to it. Right. So, um, one of my goals that I have for the book was that, uh, and the book’s two sections, there’s a content section, and then there’s like a section of top ten reference lists, and I wanted the content section to be less than 150 pages, because I know business owners are busy. Right. And, um, so there was some discipline about like, okay, what are really the key concepts and the key focus areas. And that’s helped me communicate what we do, uh, to business owners. And it’s really helped me focus business owners and not spread our thinking across a lot of different items.

Stone Payton: Okay. Let’s make sure that our listeners, I want them to be able to, to access this book. I want them to be able to to tap into your work and visit with you or someone on your team. So let’s leave them with some coordinates, some easy ways to do that.

Jessica Fialkovich: Yeah. All of our information can be found at our website. Exit factor.com. Um, the only other resource outside of that is we are franchise company. So if you’re interested in franchise information you can go to exit factor franchise.com. Um but on exit factor.com there’s a link to the book. Um there’s some free resources things like that.

Stone Payton: Well, Jessica, it has been an absolute delight having you on the show. Thank you for your insight, your perspective. Keep up the good work. What you’re doing is so important and we sure appreciate you.

Jessica Fialkovich: Well, thanks so much, Joan.

Stone Payton: My pleasure. All right, until next time. This is Stone Payton for our guest today, Jessica Fialkov with Exit Factor and everyone here at the Business Radio X family saying, we’ll see you again on Buy a Business Near Me.