Speaker: 0:01

Welcome to the Heart-Led Business Show, where compassion meets commerce and leaders lead with love. Join your host, Tom Jackobs, as he delves into the insightful conversations with visionary business leaders who defy the status quo, putting humanity first and profit second. From heartfelt strategies to inspiring stories, this podcast is your compass in the world of conscious capitalism. So buckle up and let's go. Let your heart guide your business journey.

Tom Jackobs: 0:34

The Pied Piper of Profit, the Jocular Juggernaut of Entrepreneurship and heart-led Helmsman, Mr. Richard Parker, riding the rollercoaster of ownership for over 30 years, bought businesses from nuggets to high stakes and penned to buy a good business at a great price. Today, we'll uncover the heart and hustle behind this venture virtuoso's victories, on the Heart-Led Business Show.

Richard Parker: 1:00

Thank you, I appreciate you having me.

Tom Jackobs: 1:02

A lot of heart-led business owners don't always think about buying other heart-led businesses, but I think that's definitely a area that they need to be thinking about, and I'm really excited to have you share your wisdom with them and some of the good and bad and everything in between first, what's your definition of a heart-led business?

Richard Parker: 1:24

A heart-led business an overused term where people talk about, we want to do well and do good. I think that's a little overused. So to me, it's a business trying to provide a meaningful experience to all stakeholders, meaning with clients, suppliers, and so forth. And so that goes just beyond the money, and I believe there's a double click to each one of those a meaningful experience. I've always believed that if there's an economic benefit, and you go about it in the right way, The money happens by default.

Tom Jackobs: 1:55

I like that word experience, for businesses. a lot of businesses don't think about the experience of, all stakeholders, whether it's employees, suppliers, shareholders, and clients could you unpack that in terms of different experiences that businesses have put together that have done really well and those that maybe not have done so well?

Richard Parker: 2:18

Sure. Each one of those stakeholders that you alluded to, whether it be investors, suppliers, customers or employees have their own pyramid of priorities. So if you take a look at employees, for example, people need to be paid properly. Okay. And they want to make sure the checks don't bounce, but the experience comes into play when empowering employees, as a young business owner, 29 years old, and for a number of years, my ego and insecurities got the way. I was afraid of hiring people that would challenge me because I was insecure. once I got over that, the light went on. when I started hiring people better, than me, paid them well and said, do your job. And if they didn't do their job, we replace them. But empowering them to actually do their job, to make decisions, to pursue initiatives they thought would be helpful to the business. And all these components to their job that were just beyond getting a paycheck. So when providing a meaningful experience, say, hey, here's your job, this is what you're expected to do, you're going to be measured, you're going to be paid properly, you're going to have a big upside. If you don't do your job, you'll lose it. this is your little business. if you manage it well, essentially you're the boss and you're going to have a good upside. So that comes into play related to managing employees.

Tom Jackobs: 3:42

What about the client experience?

Richard Parker: 3:45

Clients have a different objective but they want an empowering experience business owners should look at the client experience from a standpoint of help. Business is not complex. provide value to customers at a price they're willing to pay and you're going to do very well. And when I say value, it doesn't mean just cost It's value in, are you helping them? every business is in the help business. If you don't do it right, you're in the H E L business. So what are their pain points? What are they trying to solve? most smaller businesses are one piece of the pie for their customers. it could be something as small as a dry cleaner to a 50 million, digital marketing company providing services. But if you take an extra either side of the equation, you're providing help. You're answering a problem. stay focused on that, People will be happy to do business with you sometimes it takes a little adjustment in your pricing at the beginning to get your foot in the door But if you problem solve and you provide them with help and that is the experience that they want. You know when I was in the We have retail merchandising service company that used to go to retailers and help them put their stock onto the floor when they had an ad running to make sure that the inventory was in a prominent position, et cetera. And it was a very lucrative business. And I used to tell all of our and my partners collectively, we told the staff You're solving a headache. retailers with a large number of stores, didn't have adequate personnel to make sure every one of the products they bought was displayed in its right location and advertising events when there was a national ad being broken to make sure the inventory. In fact, came out from the back room because that was, it still is a big problem where, the inventory gets shipped to the store. They have an ad breaking and it's nowhere to be found in the store. So it was our job to go in and manage that inventory at store level. That particular business was run in Canada at that point. I've been living in the United States for 28 years. Canada's far less floor level employees. You go into various retailers. It's like, where the find anybody to help me here if you've got something in the flyer, it's symptomatic, and cross border we used to tell our staff, you're answering a headache. You're providing help. take care of that headache for the buyer, the merchandise manager, the vice president of merchandise at the retailer. We are going to command significant dollars for that service. that experience is the help experience. employees get one version. customers get another, you'll have a different series for their experiences. They want to make money. they're not making money, they want to know why. if you're not delivering to the investors what you represented don't hide.

Tom Jackobs: 6:25

Yeah.

Richard Parker: 6:26

Be upfront, totally transparent, understand what they're looking for, because business owners have a terrible tendency to run away from debt. Meaning, if there's investors and, things aren't going as planned, they're trying to just avoid the conversation. No the idea is have those conversations in advance, deliver bad news quicker than good news. this way everybody is in sync. They may not have the results that they want. But it's a lot worse if it comes to them.

Tom Jackobs: 6:51

Yeah. Nobody likes to learn about bad news. Other than from the source itself.

Richard Parker: 6:56

At the appropriate time, heart-led business to me, everyone, these different stakeholders have different agendas, but at the investors, the last point we talked about, that'd be more maybe from a standpoint of empathy Understand they're looking for investment and how they want to be treated? the overarching theme to all of heart-led businesses is make sure you treat everybody.

Tom Jackobs: 7:12

Set the expectations, create that experience and it all falls into place A little bit about what inspired you to create your heart-led business.

Richard Parker: 7:21

I've been in mergers and acquisitions for over three decades I've bought and sold 14 of my own companies wide range of dollar volume as you alluded to early in the introduction and been on the advisory side for buyers and sellers the help component resonated with me quickly. When I started acquiring businesses early on, I recognize that the things that we talked about already, as far as maybe empathy, maybe empowerment, what have you is a pretty, common thread. That goes through it like a common denominator in most of these cases. in early businesses I was involved with found that if I could help the customers, they're going to buy from me I could help whatever problem they have. so that really became very common in businesses that I've been involved in how do we help people? And whoever they are and whatever area of the business that they're involved with. And so the course that we developed over the years, which I developed strictly to memorialize all the deals that I was involved in, never thought it would turn into a business, and we have, a hundred thousand plus clients. As a result, it still boggles my mind. That was 100 percent done from a standpoint of help, the night before we made that program available, a robust 500 plus page program with resources, My wife asked me, how many think you're going to sell? And those are the early days of the internet. How many think you're going to sell? And my answer then still is today is, if I sell one and help one person buy the right business or avoid buying the wrong one, that's good enough for me. That's exactly what I want to accomplish. that, philosophy has never changed. I want to help people make the right decision, whatever that decision may be, And so I had an experience where I was looking at a business, it turned out to be of spaghetti to try to figure out the whole company. I ended up backing out of the deal and I had this aha moment right after that said, the average person would have bought that business. And it's only because I've been doing this for X number of years that I was able to figure out. That I would never be able to figure it out and I walked away from the transaction and that became the inspiration for, what does the average person do is looking to buy a business who doesn't have the benefit of the years of experience that I have. I'm not that smart. I've just been doing a long time. And so someone who doesn't have the benefit of that experience, what do they do? that led me to figure out what people were doing and found out there no resources. There was no good advisory service. They had trouble finding investors. They didn't know how to value a business, analyze a business, negotiate a transaction, which attorneys to hire. It was a mess from beginning to end. And that's, that became the if you will, to get into that business and business type from a help perspective because aspiring entrepreneurs and people wanted to change their lives and there was just no resources. And here we are many years later, there may be more resources, but it's actually worse because now there's a proliferation of information by the internet and social media, garbage, delusional, misleading, not helpful. demand for our materials, products, information explodes, it's up to people to find their way through the nonsense

Tom Jackobs: 10:22

that's the double edged sword of the information age is that there is a lot of information and you really have to do your due diligence in terms of figuring out what's good information and what's not good information as well. What are some red flags you would look at for, buying a business that you could share with the audience

Richard Parker: 10:43

Make sure the business is right for you and marries well to your skill set because if you're the wrong person to operate the business based on your skill set, then that good business suddenly becomes a bad business because it'll turn sour in a hurry. And so the definition of a good business fits perfectly with your best skill set. So that's really important. flags, especially in The smaller the business, the more this is appropriate. Red flags, you get certain issues like customer concentration. And that in manufacturing and distribution where there's a disproportionate amount of the revenue generated by a you also have supplier concentration. I'm looking at a business now in distribution and 80 percent of their volume. is from one manufacturer if that manufacturer goes out of business changes their mind or puts someone else into place or gets sold, I've seen this time and time again, where you have a manufacturer gets sold and the new owner. Has a different distribution network and you're out of business. So I like to tell people when you look at businesses, what can come up and bite you in the ass and put you out of business in a hurry certain things like customer concentration, vendor concentration, poor books and records. There's also the reliance, far too much reliance on some key employees, right? Where may have certain licenses or skills. you don't have and you're held hostage or licenses that don't transfer with the business. Fundamentally what people need to look at is how well is the business going to transition to them? I believe I've been preaching the boss theory for many years. I like businesses that are operationally sound. That doesn't mean they're perfect, but fundamentally they operate well. S is that they're sustainable. Because the most important thing when you acquire a business, You want to make sure that growth is fantastic, but stable until you get your feet wet sustainable is, the third point and scalable cause you ultimately want to grow. If you can't grow the business, it's going to go backwards. People should use that as a basic barometer, that boss theory and look for items that theoretically can put you out of business. stay, keep the emotions out of it because as people start to look at businesses, they start to fall in love with the product. They start to fall in love with entrepreneurship. intangibles you don't pay bills with intangibles. Here's what I'm going to do with the product add to the website. chances are the owner tried that until you know the business, you can't decide what you're going to do because you have no knowledge of the business.

Tom Jackobs: 13:07

no, that definitely resonates. the business I bought, was a fitness business relying on one person. The books were. handwritten, no systems in place and it was, the owner wanted to be involved in, helping me transition for a number of months. And that turned out to be a absolute disaster, but I was able to turn it around and kick them out and make it my own at some point. Yeah.

Richard Parker: 13:35

Yeah, people should understand you want a proper transition if it's, if you feel that you need someone there too long, it's probably the wrong business. But the reality is the sooner you get in, learn it, get them out you're the new sheriff in town, learn the business and get them out of the way. it's your business.

Tom Jackobs: 13:47

when I sold that business, 10 years later, it took me two years to get it ready for sale, where I wanted to make sure that the books were proper. It took out all of the extra, the owner compensation items, and so it really represented a true P and L statement of the true business value that made the transition easier. The new owners, have, been operating it for another five years after that and as well. It's, when you do it right, I think it, it really benefits both parties, on the buy and sell side.

Richard Parker: 14:23

Absolutely. One of the big advantages, people don't realize how much money they leave on the table. When they sell a disorganized business, and if you proper preparation, just, not only will the value, when you run a proper business where you have good books records, procedures, systems in place, not only will you increase the value when the time comes to sell, but you're going to be running a better business. So chances are the business is going to grow much stronger. The three things I tell people is number one, run your business like you, you up at night as a business owner is magnified because they have no perspective. They haven't run the business. So if you have a concern about the business, maybe it's about, recruiting, training and retaining employees. You, Push through all the time and you managed to do it. Someone from the outside who comes in and sees that it's a problem with the business, they're going to think it's catastrophic. So whatever keeps you up at night about the business, address and solve for, because in the eyes of a buyer, it's magnified. And the third thing I tell people is what happens if you get hit by a Pepsi truck? Can someone take over and run the business?

Tom Jackobs: 15:24

Yeah.

Richard Parker: 15:25

Like it's that basic. having people in place a second tier management is wonderful, looking at it from a perspective of what happens, if something happens to me today, what happens to the business tomorrow, is it sellable? If I put things in place to make it sellable, could come in and figure out what's going on in order to buy it or sell it, If you can't answer that with conviction and a resounding yes, you need to revisit that.

Tom Jackobs: 15:47

I think that point is going to be money for so many business owners, especially heart-led business owners that because a lot of the ones that I work with are solopreneurs, solo practitioners. they may have one or two employees that are working with them, but ultimately the business is them because they are the wellness practitioner in that. And if something does happen to them, that is quite catastrophic for the entire business. And so it's just a matter of putting those SOPs in place, making sure that you have redundancies and you have other people trained up and that the businesses that I've seen that are doing really well, the owner hardly does anything in the business, which is. where it should be. They're not in the business. They're on the business itself.

Richard Parker: 16:31

It's a big adjustment where, many businesses are able to do it and they don't, meaning starts a business. I'm the buy business guy, but I see this more in businesses that have started from the ground up sometimes, people that. Owned a business for a little while. We see this frequently where business starts to do well, you're making X amount of dollars and the owner keeps taking out the excess adjusting their lifestyle accordingly. So they started out making, a hundred grand and then the business grows. Now it's making 200. they're living a 200, 000 a year lifestyle. then the business grows further throwing off half a million dollars. Now they're living on a half million lifestyle. they would have been better served to live on that 200 or 250, 000 lifestyle for a while, put the money back into the business in marketing or hire key people. Because the beauty of when you exit a business, every dollar, the owner benefits, as you were talking about earlier, that package you put together what it's going to look like for a new owner, that dollar number is. There's a multiple attached to that. That's how you arrive at the valuation or the purchase price. So in very simple math, if you have a business that's making a dollar and it sells at a four times multiple, the business is going to sell for 4. Every dollar of value that you add to the business, you're going to get 4 back. So aren't you better off to put the money into the business, into the right people, into the right marketing, because you're going to get 4 back. Because very often you put money back into the business, it multiplies. And so that, that concept, because businesses as an investment should be the best investment you ever make, put the money into the business. Don't keep stealing. Don't keep taking out the business money for your own. Yes, you've earned it, but think every dollar you add of value in the business, you're going to get three, four, five in certain businesses. It could be seven, eight, 10, whatever the multiple is.

Tom Jackobs: 18:14

Yeah. that's excellent. advice especially for smaller businesses where it's, solopreneur, maybe with, less than 10 staff, it's very easy to see successes and then pull the money out for personal use for reinvesting.

Richard Parker: 18:30

We had a document preparation business that we used to do preparation of documents for people that were looking to, represent themselves in court. They're called pro se litigants for uncontested divorce, child custody, et cetera. I bought this company and it was a real mess. They had no systems, no nothing. It was marginally profitable, barely, but we looked at this business and said, as soon as we started generating, we saw what it was going to look like. We immediately took as part of our acquisition cost. It wasn't an expensive acquisition and plowed a ton of money into automating the entire business, And when the time come to sell, if I had sold that business, we got the multiple we got relative to the multiple we paid was extraordinary. And it was really tied into that automation. Now it would have been very easy to take that money and just put it in my pocket. We put it all back into the business and develop these systems so that anybody can come in and they could really identify, Hey, I could run this business, although it's complicated. It's, I press a button and by and large, 90 percent is ghost, right? So that'd be, that was a perfect example where it would have been easy to make the decision to haul out the money.

Tom Jackobs: 19:35

When do you think business owners should think about selling their business?

Richard Parker: 19:39

People want to sell when business is doing this. You don't want to sell it when the business is plateaued and you definitely don't want to sell it when a business is declining. Business owners wait too long. if they've stopped loving their business, they should sell it. if you stop loving your business going to decline. It's like having a car, when you stop caring things go wrong ideally sell the business when it's trending upwards. And don't lull yourself into a false sense of security, thinking that you can keep trajectory because every business, starts out down here, it grows, it hits a peak, and then it declines. That's just the life cycle of every business. It's just a matter of how long that takes. so while it's trending upwards, near a peak is a good time to sell, or when you're tired of running the business. the other thing to keep in mind is you want to really prepare in advance. It does take, I have clients, sometimes it takes three months, six months, 12 months, in your case, it took a couple of years, but that preparation is critically important. So I would say to people, anybody who owns a business, whether it be, A timing issue, meaning you're, 62 years old and you say you want to be out. by the time you're 65 or 67 you know what your timeline is. Get stuff in place. Certainly if you've lost interest in the business, you've got to make, plans to start getting out and the third piece was definitely want to sell as the business is on an upward trajectory.

Tom Jackobs: 20:52

And now is there a difference between selling to an outside party and selling the business to the employees, especially for, that you're retiring, you're 65, you love your employees, they've done a great job and you want to sell them the business is there a difference in doing that versus finding somebody outside?

Richard Parker: 21:10

There's definitely a difference and probably the most important one is smaller businesses will almost always have vendor financing, seller financing, a balance of sale, because it's the only way, to get the deal to the finish line. You can't really get these business financed completely. So there's always a piece of a seller note, if you came to buy my business and we didn't know each other, we would have to have a pretty long feeling out process till I felt comfortable Cause I want to make you paid a note. are you able to run the business? Is he a good guy? Is he trustworthy? is his heart. in the right place, are all the things aligned? This is the right person to take over the business, I'd have this whole checklist of things that I'd ask. Now compare and contrast that to if you turned around to thinking about your employees. You know them If you believe they're capable of running a business, you'd be more inclined to provide them a seller note, you have faith in their ability. You've seen it every day. So the single key biggest difference between selling it to the employees and selling it to an outsider is the terms and condition by which small businesses transact. There may be a higher level of comfort providing favorable terms to people

Tom Jackobs: 22:18

and that can provide a nice revenue retirement for that business.

Richard Parker: 22:22

In retirement, there's a relationship there. You want to see them succeed. We had something recently with, which I was exposed to, which sort of off the subject a little bit, but one of the things I advise your listeners, especially if you have a lot of solopreneurs or smaller businesses, there's a situation recently where a company was sold, all the employees were really pissed. and the reason was the owner of the business had represented for many years when the time came that they were going to retire, they were going to try to figure out a way to sell it to the employees or give it to employees.

Tom Jackobs: 22:50

wow.

Richard Parker: 22:50

very favorable terms. this had been a carrot held in front of the employees for many years. then they sold it to a third party and the employees were livid. this was an employee based business. all employee generated. I had the conversation with someone recently, and this goes back a ways as

Tom Jackobs: 23:05

Yeah.

Richard Parker: 23:05

still animosity.

Tom Jackobs: 23:06

Wow.

Richard Parker: 23:07

if there's something you're thinking about and you represent it to your employees, if you change your mind, let them know early if you mention it to them, then give them the first shot at doing that. Because if not, you could really, and so you don't, not only could you ruin the employee, the person buying it now got a group of employees.

Tom Jackobs: 23:24

Oh, wow.

Richard Parker: 23:25

Exactly.

Tom Jackobs: 23:25

What a nightmare that would be for the new owner to sort out. Oh my gosh. Richard, this has been a fascinating conversation definitely the pitfalls and, but also the good things to look at, especially for those heartled business owners that really feel like the business is them. And I like what you said about removing emotion when selling or buying a business so the transaction can happen. Versus being so emotional that it sabotages the deal thank you for being on the show. How can people find out more about your business and how you might be able to help them?

Richard Parker: 24:02

The easiest way is richardparker.com. We've got articles, free resources, videos, podcasts. lots of educational material if they want to get in touch with me, use the contact us page, just mentioned there, please send this to Richard. So my team will make sure it's routed properly, but richardparker. com. And I really appreciate you having me. nice to have these, more, the questions related to heart-led questions, as opposed to just numbers.

Tom Jackobs: 24:24

Awesome. Thank you so much for being on this show. I certainly appreciate your time. Thank you listeners and those watching the show as well on YouTube. We really appreciate it. Make sure you're checking out everything that Richard's doing. We're going to provide the link in the show notes find out more about buying a business. Buying a business or selling the business and making sure that you're doing it the right way. And a little word of advice from somebody that's bought and sold a business, do it early until next time, lead with your heart.

Speaker 2: 24:52

You've been listening to the heart-led Business Show, hosted by Tom Jackobs. Join us next time for another inspiring journey into the heart of business.