 Good morning and welcome to our strategies for succession with FMBO. I'm Scott Koch CEO at the Longmont Chamber in April this year FMBO presented with us our first ever people-powered event with Kurt Spiehler and state demographer Elizabeth Garner Who touched on trends in business and the fact that many are entering new phases? We're joined this morning by Josh Huesman Josh Huesman is the vice president of business owner advisory services at FMBO and has spent his entire career working for and Business owners and being a discerning observer of their decisions. Good morning Josh, and thank you for being here. Yeah, thanks Scott for having me We're delighted you've joined us for succession strategies with the Longmont Chamber of Commerce I'm Josh Huesman with FMBO and over the course of the next few minutes We're going to hear from two stories of people that have gone through their own succession And they're willing to share their journey into becoming a business owner So you're going to hear from two Perspectives that are that of an internal Transition, but we've designed this with two audiences in mind Those of you like our guests who are one day hoping to be a business owner Maybe within a family. You're an aspiring entrepreneur But we've also thought about those of you who are on the other side of this you desire to exit you desire to transition out of a business and so this has two audiences in mind internal and Outgoing business owners and there are three specific insights that we're hoping that you hear today The first is just how long it takes to Design and execute a succession plan. It might be just a little bit longer than what you think The second is how to build transferable value from one owner to the next and then Lastly, we're hoping you hear about the factors that influence the price or the value of a business Today we're going to hear from Nate Golter from the Longmont florist and Sarah Morgan from martinis bistro They've recently taken over for two storied businesses in the Longmont community These are places that we can celebrate both special and regular occasions a florist and a restaurant and At FMBO we think businesses like martinis bistro and Longmont florist are very important This happens to be our 165th year of being a business in six generations of being owned by one family We think that the business community has a symbiotic relationship with the bank If the bank is healthy so should the business community and vice versa And we think about this so much that we actually have a practice dedicated to this We call it business owner advisory and I lead the practice where all we do is we help business owners prepare and Plan for their journey through a succession The most common story that we hear from business owners I think kind of can be captured by this little timer At the end of the day business owners feel like the sands of time has just gone through There's not enough time in the day by the time you work through customer problems employee problems You work through supply chain issues. There's just not enough time to get through the succession plan But we think there's a second part of this That's that we can just keep flipping this timer and We can every day just kind of move from one day to the next Thinking that we will someday get to planning for a succession Tomorrow's problems will get tomorrow's effort and so it's our plan today that we're just kind of kind of pause time For a little bit. We're going to hear from Nate and Sarah about their specific journey through their transition It's pretty important for us that you know that these two transitions that you're going to hear about are friendly transactions from Family or for a business that they already worked in and so we know that it'll be a little bit biased towards the internal transition Business owners have many of options internally externally families to two competitors There's a exit planning community that we're a part of that says all exit planning is just good business planning It's just about building Optionality into your business regardless of the path that you choose And so if all exit planning is just good business planning, we think that you'll pick up some insights today Even if you don't know which option you want to choose Having these succession plans in place will give you those options whenever you decide to make that transition And so with that I'd like to introduce Nate Golter with the Longmont florist Nate the the direction that we were given here was Jimmy Fallon They didn't give us any joke writers And so I didn't have any humor built into the monologue here But I'm gonna make an attempt here and so I'm curious if you heard about the flower that went on a date with another flower Tell me about it Josh. No, I haven't heard it I've heard it's a budding romance That's fine. I'm just piling your leg on this one But I did some research and I hear that the flower business is blooming would you agree Yeah, first of all, I think I'd keep your day job Yeah, we're you know We're doing well. We've been we've been lucky lately. So if my kids were watching this I think this would qualify for some dad jokes and so this is what you get when you don't hire joke writers but Nate we're gonna kind of just casually talk through your transition and For those that are dialing in today or watching this later We're gonna avoid some intimate details with these transitions Prices and and some of the very things that we should keep confidential But there's gonna be some things that we're going to learn from today And so I want to thank Nate for being willing to share your story Maybe let's let's rewind the clock a little bit back to your days at at CSU and becoming a teacher Kind of before you were the owner of the Longmont florist. Sure. Well, yeah clearly I don't know what I want to be when I grow up. So I went to went to school for engineering Graduated with a engineering degree that also had a teaching license. So I taught taught math and science physics and engineering and at the high school level for four years and While I was there I started to move kind of in into An administrative track So I was prepping to become a assistant principal and kind of moving moving in that direction and Through some of that training I was talking about budgets. We're talking about hiring We're talking about HR issues and planning for the next year and You know, so that experience was Similar and it's certainly not the same right different industry different different problems But similar to what I always thought my parents were doing and running a business and it was kind of about that same time That they were or my dad specifically was kind of whispering about retirement He was he was talking about some different options and I Came to them and and said hey I think I'd like to transition into the business and they would tell you they were very surprised Right, they always thought that I'm one of four on the oldest of four And they always thought that we had sort of our career paths set out before us And it was had nothing to do with the flower shop. So they were thinking about they were thinking about You know, they were just starting I guess to think about Transition outside of the family when I came to them and and they would say it was it was yeah very surprising. So Join the business Spring of 2020 which right the entire world was upside down So my last days of teaching were via zoom and never really saw the kids again And join the business when you know, nothing was the same there either. So it was very turbulent time sort of started as a delivery manager and then worked on to become the general manager and then Finally now been the owner for about a year. Yeah So co-owner with my with my parents still but you know acting sort of president When we talked beforehand you said that the the florist was always a part of your life though And and there were parts as you were growing up where you were making deliveries But at some point you you had an epiphany and maybe talk a little bit about how that came about, right? Yeah, I mean, you know, I had grown up in the business So from 12 years old my parents have pulled me out of school for Valentine's Day And you know, I always thought it was great because I got to miss, you know math class or whatever Yeah, working long days ever since I had my license. I was delivering So I'd been around the business right people ask how long you've been in the business. Well, I'm 30 so probably 30 years Yeah, sure, but I never really saw it as My career I didn't see it as as really a career option And I think that's maybe a testament to my parents. They were never pushy. They weren't pressuring us, but I Really did have that experience you know it when I was teaching that I I Had it kind of an epiphany kind of a calling. Yeah, you call it, right? You know my parents were talking about retirement and I'm like This is a third-generation business in Longmont with a with a beautiful mission I'll kind of talk about that a little bit later and It's similar work. I really think I should do this. I really think I should pursue this and It was a decision that that I came to kind of on my own with you know My wife and talking through that so it was important that that it wasn't it didn't feel pressured And it also didn't feel Given, you know, it wasn't just like okay. Sure. Here's keys, you know Had to had to work into it. So yeah, that was a Transition that was surprising to a lot of people in my life, but Did feel like a calling We we talked earlier our bank is owned by a family and it's went through six generations now of ownership and The owner of our our bank says that each generation should be capable Interested and passionate and as we kind of talked about that You kind of went through a journey to to get to each one of those maybe talk a little bit about capable interested and passionate Sure, you know, I kind of maybe let my employees or other folks comment on my capability You know if I can do the job you did a great delivery Good I'm waiting on the tip Yeah, I have a diverse background, you know, certainly I'm not we have Really capable team. We have truly gifted designers, you know friendly and helpful sales staff We have a really capable team. So that's very important, but You know, I have a diverse background in engineering and technology and I Think I I think I learned quickly which is which is important So maybe that speaks to the capability thing, but I'll I'll let others comment on that You know as far as as interest and passion I almost think those two are maybe two sides of the same coin and Interest is is the initial spark the initial The initial pull but passion I was I was used to tell my students this when they were freaking out about, you know Getting into colleges or what they were going to do after graduation My thought on this here is that passion is Developed passion isn't innate right the first time you do something you're awkward you're bad at it You're not it'd be hard to see you have a passion if you're stumbling down the ski slope, right? But through exposure and over time. I think you develop a passion. So for me that passion I didn't come into the business with a passion for flowers I've developed an appreciation and a love for them. What I do have a passion for is Is our mission is what we do as a business, right? So real simply stated our mission is helping people spread joy. Yeah, so every time somebody comes to us It's to send love to send appreciation to send thanks to somebody in their life, right? A vast majority of our customers are sending flowers to somebody else, right? A lot of people are consuming for themselves, but That's what we get to do every day, right? Whether it's a wedding or a funeral big event and it's really important or Just because it's Tuesday and you have sure right it's it's I'm really passionate for what we do as a business And I'm lucky to be a part of it. So I think that Passion was developed though over time and with exposure and experience and Yeah, I'm really excited to come into work every day doing what we do as a business sometimes you have to step back and see that right if you're Dealing with a specific customer problem or like you got to whatever work something out But what we do as a business I think is is really valuable So let's maybe then talk about the transition and so if your interest and your passion was curated over time When did the conversation with your mom and dad start to take some serious shape about you being the next owner of the Well, I think when we first I kind of asked my parents to dinner and I you know I said I had something for them and You know so we went to dinner with my wife and you know my parents taking it back a little bit and they were really I Think they tried to take a really sober look, right? They were like here are the really long hours that you have to work Especially at holiday time and certain times of the year here are some of the issues that that you might be taking on Here's the financial risk kind of risk reward, right that you can be looking for so We saw that there was a lot to to work through And it was important for me to work in the business have experience in the business You know prior to any actual transition taking place, but in probably my third year of teaching that that conversation started and then it wasn't until four years after that three three three and a half years in the business that That the actual transition took place Yeah action took place one of the things that I started with was we hope that people will hear about just how long Successions maybe take to get executed if I heard you right three four or five years It took from that really serious conversation to it actually happening. Yeah I mean you talked about internal versus external right if if there were two pieces that we had to work through and Those two were operational in the business. What sure what roles am I going to be doing? What roles am I you know my dad going to step away from that? I'm gonna have to take on and then sort of Financial or ownership right working through what what the transaction will actually look like interest rates timelines lawyers, you know on that side of things so Yeah, it was it was a lot. There was a lot to sift through we had probably We tried to do a quarterly meeting where we had You know all of these topics sort of outlined and and we were working through timelines Okay, at this point. This is you're gonna take over Payroll and yeah, and the different roles and then you know what was happening From the ownership structure as well, so there was a lot to think through I think if it was maybe like an external sale You would be thinking a little bit less about operations if your operations were tight If you you know had a manager right right and had stuff in place That's almost a separate conversation, but for us. It was combined. It was it was all the same and You have siblings and so maybe that was part of it as well of the time that it took maybe talk a little bit about Fairness and and you went through this You're the only sibling that that's interested and now the owner and you talked about when when we prepared for this and arms link Transaction and maybe just talk a little bit about the specifics We don't need to get into the details of the prices and things like that But how you guys arrived at being fair. Yeah, you know My parents had gone to each of my siblings separately when I had expressed interest and said, you know, do you have interest in this? Are you are you? Looking to get involved in any way and some of them had moved out of state really not interested and had their own things going on So I think from that standpoint, they were just upfront and and you know honest about that But we for the business got a couple of different valuations and I think the most valuable one was we have a industry expert our Accountant who works in the industry works with hundreds of florists across the country and was able to give us a really specific valuation based on our own metrics and and you know as it compares to flower shops all across the country and I think that was important. I have You know friends or acquaintances here who are just like their parents like they'll either just hand the business off or Pick up price kind of out of the air You know based on a web search or something like that and and I think it was it was important for Both, you know, my siblings may be in the future to know that it was it was fair transparent But also for my parents and I read we came into it With a really good relationship and happy to say we still have a really good right But it was important for us to have that sort of arm's length transaction right if I wasn't your son and if you weren't my parents what would this transaction look like let's try to do it that way and You know, there were there were some negotiations about some things and You know certainly the timelines, right? I wanted to have it happen really fast and they were like hold on easy sure But yeah, I think it was really important to have that have that arms length transaction to where We treated it seriously, you know, we involved accountants and lawyers and I Think Thanksgiving dinner is gonna be easier in the future and because we we you know took that approach When when we do our work within the FMBO footprint, it's a bit of a Counter-intuitive thought but embracing formality as a small business owner helps in this way, right? And it feels like that's one of the things that the valuations you talked about having Attorneys with contracts and in those kinds of details. It was important to know that this was a fair transaction in that way Yeah, it was and you know my dad knew everybody and I was kind of introduced So I was coming into it from from that way too, but yeah, I think what that formality did was give Give it some legitimacy. Yeah, both of us, you know, and and we were both able to say I think my parents were then you know More confidence stepping back too because they they saw that I went through that process with some competence and it gave me sort of some confidence to going into the business and You know treating it Not like it was given not like it was like handed over to me But that I was investing my time and money and and really going to you know and invest in this thing So yeah, I was it was I think it was valuable Yeah, as we kind of get closer to the end of our our conversation You're an owner now and and so you talked about the transferability of your skills of administration And so now you're the owner and we talked a little bit about the emith book You know, there's the technician the manager the entrepreneur How do you manage the day-to-day responsibilities as well as ownership responsibilities? And how do you kind of think about that long term? Yeah, it's it's a difficult to write the your your timer analogy, right? It hits home for sure. Yeah, I Spend a lot of time on the things that are urgent and maybe not enough time on the things that are important sure And and so it's it's always a balance, but one thing I'm thinking of is You know just to go back to our people. I think we have some really tremendous people in the business, right? We have a design manager who's been in the industry for years. She's tremendously talented a buyer We have a sales staff who's engaged who's you know thoughtful and knowledgeable so I think having the people in the business and and one goal that I had to was to Empower more of our people to do more things more Which which then frees me up to work on some of the bigger things some of the you know the things that only I can do So that that's an approach that I'm taking is how can we empower more of the people in our building to do sure more things more often? It's a bit of a paradox the the business becomes more valuable the less Important you are from a day-to-day Sure sure and it's always listen It's always easier to just do something yeah rather than teach someone else how to do it and that was something my dad And I kind of went through right and But I'm also thinking about that when training somebody that this is this is time well spent sure This is just show rather than taking the 20 minutes for me to do it I'm gonna take the hour to show somebody how that's great and make sure that's you know that they're able to do it We're gonna bring you back for some Q&A at the end here, but you're a family business, and you have young kids How are you thinking about the fourth generation? Maybe our last question here and just as you had your own experience? And you and I talked about this you know the obligation and guarantee both probably aren't the right way to approach this But but you thought your parents kind of hit a sweet spot, and maybe you're thinking about that as a dad yourself Yeah, I do you know Avery's my oldest is six and so I'm we're talking to lawyers right now No, she so certainly it's not specific or logistical right now I think I think it's really the the approach you know and making sure that she First of all is competent competent capable in herself to be doing Whatever it is she wants to do but also not putting a pressure on that right not not saying that This is who you are. This is your legacy, but kind of allowing her to discover what that looks like for her, and you know I'm speaking about Avery. She's my oldest, but we've two others and You know I think that approach was was valuable for me for from my parents The one thing I would like to do is is as she's coming up as she's growing up Maybe hand her a broom, but then afterwards bring her up into the front office show her how yeah cool Something on the website right because I think a lot of times we were Sweeping out the back floor right where we're chopping flowers. We're doing a lot of the difficult work and You know maybe sharing some other aspects of the business. Yeah, would be how I'm gonna think about it That's neat. Thanks for sharing your story, and hopefully this will be insightful for everybody listening now or in the future And so we'll bring you back up for a little rapid-fire Q&A But we'll ask Sarah Morgan with martinis bistro to come in and join us now Well, Sarah you you You've heard how bad my humor is but I'm gonna ask you a question as well Did you hear about the new restaurant on the moon? Oh? Great food no atmosphere In the if we had a stage audience here, I feel like that would be a little bit more That would be the laugh card They're obligated to laugh at that point. Why did the duck not enjoy his restaurant experience? Why is that? He didn't want to see his bill I told that one to my Three kids the 12 year old did not laugh the 10 year old did so I think that's probably about 10 year old humor there Sarah thanks for for joining us as we mentioned with Nate You know we'll avoid kind of the intimate details here of the transitions and so we want to say thank you for sharing your experience because We already heard from Nate these things take time and We talk about at fMBO kind of just incremental progress We're not going to wake up one day and just our succession plan is in binded and it's done and it's ready And it's just going to happen. It happens over time And so thank you for being willing to share your story here for those that are listening in Maybe like we did with Nate. Just give us a glimpse of your history pre Martini's ownership we talked about you said this wasn't always the plan and And maybe just talk a little bit about your own journey as you came into the prior to owning Martini absolutely I'm very similar to Nate. I feel like you could look at our Resumes and almost think that we have imposter syndrome like we started out in one area and just made some serious pivots but no, I went to school for equine science and pre vet for my bachelor's actually I got my associates in nursing and Restaurants have always been what I was doing in between all the other things It's very transient industry can hop in hop out But I realized very quickly that I loved managing I like building businesses. I liked working with the people. I like Bringing the business into the community. It's you know, definitely a pillar within a community But you know a healthy business and so I got into managing very quickly In fact, I think my first management position was when I was 20 and even then I never acknowledged the restaurant industry is being my profession and I So I you know kind of did this whole game of doing restaurants at night and my horse habit really during the day and I don't know in the one day. It just kind of switched When I was 30 I was pregnant with my first child and I had just graduated from CSU and I realized that I didn't want to go on to vet school. And so I decided to Go back to the restaurant industry at least step down from managing as I was when I was going through or finishing my degree And I step back to a serving position, but at a higher-end restaurant and I loved the I love the schedule of it my plan was I'd be able to have my be with my daughter during the day and then Go into work at night make the money I needed to make to make life happen. And so and as life does happen I we had a big shift of an employment situation when I was married And so I had to get back to the corporate world. And so I started doing some franchise development with taco-johns and so I did that for several years and Then I had another kind of shift in my life at right after my second child And I ended up back on this side of the the restaurant industry the more in the trenches more the public-facing You know forward side of the restaurant industry, which is where I was happier Mm-hmm. And so I started working for a few different chefs I'd worked for in the past and they had introduced me to this new chef that I was doing some work with and he was the one actually that stopped and Asked me one day. He's like how long have you been doing this? And I said, I don't know since I was 13 was always my statement And so he's like, yeah, but how long ago was that and I said, oh, oh my it was 21 years ago Time has a weird way to do it. It does. I had never thought about it that way and at that point I'm like, I've never honored this with my profession. It does make me happy. It's kind of just like so yes It was never the plan But so that just made me that kind of just shifted my thinking with what I was doing in the restaurant industry my the success and the failures all the education I had had in the restaurant industry Although it wasn't formal. I truly have been able to learn from some of the industry best and both in the like the small municipalities to like nationwide professionals and So bringing all that together. I ended up getting the general management position at Martini's when it was under different ownership And I had become familiar with that restaurant About five years prior. Okay. And so it was familiar with it. I thought it was darling I liked longmont like how it was in the community. So it's kind of a perfect fit And so about two years later was in another Just kind of different position and the owners had approached me and they're like, hey, we're thinking of selling Do you want to buy and just like three days prior? I had mentioned? I don't know. Maybe it's time to buy Yeah, and so I was like, yes. Yes, I want to do this. I want to figure this out. So my really My succession of taking over the restaurant happened really quickly because this started January 1st of 2019 I came back to the restaurant because I had stepped away for a minute I came back to the restaurant knowing that I was gonna purchase. Okay, and my original closing date was April 1st of that year But I'm sorry. This is 2020. So obviously we were dead in the water by middle of March And so we put everything on hold and luckily we were all in the position to be able to do that and the original owners got us through PPP and The start of the pandemic and then I ended up purchasing finally July 1st of 2020 So I bought right in the middle of pandemic. I knew what I was getting myself into I understood how the restrictions were gonna work and we structured the deal where it kind of worked So I'd have the most success going through such a hard time. It wasn't easy It was the hardest thing I've ever done in my life. I was sick every day I think like just anxiety attacks constantly But you know where Nate and I are very similar is that Nate's experience kind of came through his family You know over his 30 years. Mine kind of came through that you know 25 years of experience now Leading up to when I took over as a manager or so or as an owner and being the GM for the restaurant My owners at that point were very standoffish So I already had my hands and a lot of what I thought the restaurant ownership was So when I did finally take over it wasn't as massive as a transition as it would have been had we done this from You know all of it within six months. It probably wouldn't have been successful So yeah, that's how I got here, you know when I think about my time at the bank So I've been at the bank for 16 years. I've always worked with business owners And I think if you guys a lot like superheroes and I'm not trying to get points here But you guys make decisions Intense times you take on risk that a lot of people don't Maybe talk a little bit about your your epiphany of I could be an owner And you know maybe not so much about the restaurant business, but taking on that risk that if you knew you said what you were getting yourself Signed up for what what kind of transition did you go mentally that I could be an owner? Yeah, so I had There's a saying that it's normally by your third business ownership is when you're successful And I have always been an entrepreneur. I knew if I found out how I could make money I was gonna do it and so that made me very Gritty that made me very hard-working. I have a strong work ethic Over time you definitely learn how to take the punches and you know the fastest way to success is failure And so as many times as you fail and get that under your belt that seasons you in so many ways You learn so much more from failure than you do success You get stronger from failure than you do success And so I feel like our culture right now is very failure adverse Where it's just scared to death of it We don't want we don't want to know what everybody's gonna think about us But it's really important that you kind of like settle into that so the entrepreneurship and Those first initial steps, you know, I was very comfortable with When I finally Realized that I could take on a business with employees That was the biggest thing the people management is the scariest aspect of it you know when you're dealing with employment taxes and benefits and employment retention and Engagement and enrichment you when you really do understand that employment or owning a business with employees is more of a Stewardship it's not an ownership. You are responsible for these people. They're livelihoods A lot of their happiness as much as we don't want to admit that we don't want to be too close to that because it hurts when we fail It's it's a big thing so I guess as you grow and you get experience with this and More resilience with it is when you finally realize like I can take on more and sometimes You know the universe is gonna put it in your lap before you really take that step forward and then be you know At first but it's just finally when you step up. You're like, okay. Hello, hi water. Here I go. Yeah When we talked before you said I asked you what are some surprises that you learned though as a business owner I feel like we talked about maybe a hailstorm or something like that So moving from a general manager to the owner What were some things happening at the ownership level that you weren't aware of that immediately now you are oh? The people management on a different level in regards to now I have a bookkeeper and a CPA and the insurance guy like I have a better relationship with my insurance person Then I ever thought was gonna be necessary It's it's managing now on a different level. You know if you think of it as a pyramid I've now on I now understand better that every management level should really only have about four to six people under them that they are managing and So as the business grew and I needed more like ground floor employees Then I needed to start building that next level of employees that could manage those because I could no longer do all of that Plus I already have my four essentially that I'm managing between the bookkeeper of the insurance guide now a general contractor with a huge hailstorm I've got to manage, you know more that infrastructure And then I have my four front-of-the-house managers that are then managing about four people apiece So that's been the new understanding for me is I guess I was kind of aware of it But then actually needing to you know push your sleeves up and start building that structure for each level of management Was a huge surprise to me and time-consuming it I laugh when people ask me how many hours a day I work I'm like, why don't you ask me how many hours a day? I parent my children because it's not the same Yeah, it's never-ending. It's the work life balance is not a thing. It's just all one and I'm totally happy with working that way It's not for everybody. But I love what I do. I am very passionate about what I do it. I Can never stop learning. There's always gonna be more that I need to have a better understanding about Also, I knew that going into it But now the the level of the education the continuing education you need to have as an owner So you're really doing right by your people and by your business That's exhausting in itself. Yeah Nate talked about this as well And one of the insights we want to make sure that people hear is the transferable value And it's a bit of a paradox but building yourself out of the day-to-day Operations is an important part of having a valuable business Maybe talk a little bit about the transaction itself And so if it was an a bit of a abbreviated timeline In our discussion though, we talked about valuing a business and how difficult that could be if you're valuing assets versus goodwill and Brand and like we said before we won't get into the intimate details But it was something that you had to walk through and you guys needed to arrive on a price and a structure Maybe talk a little bit about how that happened So you and I discussed this a little bit and the restaurant industry is very different when you're coming to valuation And maybe it's not very different but every business owner selling their business wants to believe in this blue sky price You know, I've built this business up and you can hand it over now granted Not that there's not value to that but especially in the restaurant industry. We don't really go On a lot of that. It's truly just an asset sale And so the owners the current owners are really making their business from that day-to-day business If they've kept it healthy healthy and that should be really seen more as their payout Whereas the price the final price that you come to in which what most banks are going to support Is what is going to be behind that money? You're collateral essentially And so it's an asset sale And now I was very lucky or blessed in that sense when my owners had come to their price I already thought it was very very fair more than fair. They were ready to exit They really did believe in the legacy of the restaurant They wanted to continue to see it grow especially considering the economic times we were in for covid There was truly no negotiations much at least needed on price wise The negotiations that we really engaged in were Kind of the the successorship of handing accounts over Over time You know, I had to have reasonable time to get as much capital as I needed to get started because Cash flow working capital sure, especially during a pandemic when we're dealing with so many closures They were also holding they own the real estate as well So we had to negotiate the lease for the real estate and then I wanted to position myself to where I could eventually take over the real estate So negotiating all of those details We often see at the bank That some business owners don't Have the same level of success as the outgoing owners there and maybe their entire Retirement is dependent on the sale of this one one business And one of the things that we we'd like to make sure that those listening in is the importance as an outgoing owner If you're in that audience, it's on the outgoing not in sarah's point here of having some kind of value estimate early 10 years prior to your exit so that you can kind of go through that exercise Of an asset sale or a stock sale, you know And what would the incoming buyer be able to finance and we call that the archers mindset a little bit of Not trying to hit the bull's eye right now But put a couple of arrows out there and then do an analysis say if I sold for this much, you know Would that be enough and I can't say what you're outgoing owners, you know What kind of exercise they went through but the earlier the better in getting some kind of value estimate as an outgoing owner So those of you that are kind of outgoing you'd like the desire to sell That's a really important insight, you know, especially when you think about the an asset sale versus, you know, a stock sale So when you think about the Transferable value to the next owner You talked about your own timeline and like we ended with Nate Maybe let's kind of end a little bit with you. You're now the owner. This is yours You have a vision which you shared with me over there your next 10 or 15 years of what you'd like to do Maybe talk about that and then, you know, weave in, you know If you have any lessons for someone that's maybe in your shoes that has that runway of 10 to 15 years You know what what you might be willing to share. Yeah, so I do definitely believe the mantra and my people hear it all the time if you want a ladder to Climb up which, you know, I think any good employee really wants to be able to elevate themselves within a business So if you want that that ladder to climb you've got to keep me free enough in order to build it And so, you know where I currently am in my ownership You know and building that kind of infrastructure where I can remove myself from the day to day on the floor Which definitely has its own value and that's been difficult to replace myself with But, you know building my management structure Now where I'm currently focusing on is replace myself as the general manager And so how do I really put somebody in my shoes? I can take over the, you know doing a payroll and Um overseeing the the hiring and firing and team development and that kind of thing and so I've been getting more comfortable the idea that I need to have my management Team start looking for the general manager. I've tried to hire and that I've realized that's not a good route to be going So I need to be able to step away. Maybe bring a few candidates in for them Let them hire them and see how that goes. So that would at least replace me as the GM Replacing myself as the owner my daughter definitely has sites on that position. She uh, I just said out loud like I have maybe 15 years left in me of grinding and then I want to be able to hit that passive income button And my daughter just didn't skip a beat and she's eight and she goes, okay, I'll be 23 I can take over the restaurant at that point I'm like, I love that. I'm not trying to put that kind of pressure on you But she is doing great, you know a lot like, you know, Nate's family and sweeping the floors My daughter is an amazing busser. I was so proud of her a couple years ago as a six-year-old Carrying a full glass rack through a packed restaurant because she's helping us so she definitely has the makings to be an owner and I You know, she's got that grit and that willpower lord. No, she's a hurricane and now it's just kind of Cultivating that and always giving her the out if this ends up not being what she wants to do I don't want her to have that kind of pressure or feel that failure of, you know, not meeting my expectations So that's my thought there. I truly love martinis. I don't ever see myself selling it I love what it is for the community and I hope that my family is Leading it into the at least the next two generations But we'll see how it goes There's a book that I'd love to recommend to anybody listening in it's called the quest for legitimacy And hearing you talk about your daughter and nate as well it's written about the incoming generation and How difficult it can be living in the shadow Of a successful family whether you're a fireman in new york city where that's a commendable profession you're going to be a fireman like your old man or You're riding in the delivery truck or you're sweeping floors, you know At the perspective of the incoming generation. It's actually a little bit lonely And so I love hearing both of you talk about how it's not something that needs to be an obligation And it feels to me like you're releasing that pressure valve a little bit and the author of the book I think would would agree with you guys there and so sarah. Thanks for sharing your story We'll bring nate back on here and we've got a little rapid fire and then I'm going to pull up this ipad so ruby showed me how to do it Hopefully I'm going to see if there's any questions in here for the both of you. First of all, thanks for sharing Your guys's stories not everybody's willing to do this and I think this can be really helpful To those that are listening in so a couple of rapid fires Nate will start with you give sarah a chance to catch your breath Maybe talk about the highest high or the lowest low as you went through the actual transition of the business Yeah, um Highest high lowest low. I mean it was such a turbulent time, right? It was it was pandemic You know, I mean I think the same with that. I think every every business was like Am I going to have a business next week? You know and and that was That was uh, that was kind of frightening. So the the you know first time we had to close our doors um, and we were We were in a lucky position that we were able to deliver and we took orders online and phones and stuff like that So that was that was a low point for sure um and You know that let's see the highest high Was probably the brief moments there weren't many of them But but that's maybe why it was it was all that much more important But the the brief moments where my parents kind of expressed some pride in me, you know Where they were they were able to say and and I could tell it was genuine. It wasn't just like Every parent thinks their kid is Genius and then somewhere in middle school. They realize oh, they're just kind of formal But but the the time where where they were able to express some pride and and the work that I was doing and have it be genuine So yeah, those those moments were cool. We're about you sir. Highest high or lowest low Uh, lowest low is definitely through the pandemic and having to Having to let my employees go and not know when we're gonna reopen. Yeah, that was awful I mean to see we all knew it was coming Um And you know the restaurant industry which I mean your industry probably isn't much different But you know, we have a lot of mental health kind of runs rampant in our industry when you're dealing with artists or creative people You deal with great highs and lows and so seeing that You know needing to release your employees again and put them back on unemployment because we've got to close our doors Oh, do you it's totally out of your control, but you just feel like a failure um The highest highs. Oh, it's probably the day I got to reopen my business I was a mess. Yeah, I needed obviously needed product and we need to get the restaurant back up and going And we're trying to do this as fast as possible because we need money. I was a total mess I had to keep like hey or calling my vendors and then hanging up because I couldn't compose myself enough Um, but then yes, obviously it it is really when your parents turn around they're like look what you did I'm like, thanks It's good. I'll never forget you guys both talked about covid I remember where I was at when it was March of 2020 and and the bank asked us all to go work remotely for a day To test the the virtual network and I'll never forget how much of a moronic statement I made then to the people I was managing at the time I said, you know, we'll do this for a couple days and then we'll be back And just how silly that was, you know to know that this wasn't predictable at all and you guys both Interestingly, I don't know until right this moment. I really captured that you both went through this transition at one of the most strenuous times that we've had in generations I don't know about you, but I had to stay away from watching all the Documentaries about all the failing businesses and trials and tribulations. It was like it was so traumatic I felt like I had PTSD about it. Yeah, but it was definitely a thing that we lived through There was so much fear. I think too from the not knowing we had some staff who were in their 20s And some were in their 70s and like that dynamic of We have businesses that Remote work for a majority of our team is not possible. Yeah, of course. You can't make that virtually, you know so That that fear and managing the fear and expectations of everybody on the team was uh, yeah You know, it was forming. It was baptism by fire. Absolutely thinking about the transition So we have people that are dialed in today that will watch this another time What's something that you know now that you wish you would have known before you were an owner Before you went through a succession plane um, yeah for me, I think the The timeline of it and an appreciation of the timeline, you know, what what it was going to take And uh, sarah, I think before this I heard you talking about Not really having an understanding of what ownership really means, you know beforehand It was it was when I was sort of manager And my parents were owners. It was easy for me to be critical of some some action some jobs or whatever And then now that you know, I'm in the other chair. I'm like, oh my gosh, you can see how Um, you know, it can be overwhelming. There's a lot of different aspects, you know from from insurance and hiring and Purchasing a vehicle or whatever. It's it's it's all encompassing and um I think an appreciation for that. It's it's also one of those things you can't You can't know until you experience it. So once you're in it, then then it's That's how you learn but uh an appreciation for for that and and you know for For our outgoing owners and my parents, you know, and the work that they were really doing. Yeah Walking a mile in their shoes for sure. Yeah How about you anything you know now that you wish you would have known then? Oh, I laugh because I would have told myself anti-anxiety meds going through that is totally acceptable No, when you're going through such a big transition like life that's a life transition and Stepping into this role of being responsible for other people's lives. Yeah, make sure that you really have a healthy self-care plan Understanding that if your cup isn't full then you can't fill others And so learning and getting better about that over the years has been Absolutely necessary That's that's a takeaway that I think is super important for all business owners and and at our bank we've recently kind of Tried to make it more comfortable to talk about mental health And we've actually now been working with an outside provider to provide Coaching and counseling that's you know kind of outside the walls of the bank You know to be able to talk to things that maybe you're not comfortable talking to your manager about For for fear of something and so mental health is something I'm glad to hear you say I think business owners. It's probably something that isn't talked about enough great Okay, we've got a couple of questions that have come in and I'm mindful of our time here We have a few minutes left Sarah this question is for you had there not been a fair valuation of the business that they gave you And so maybe think about this from a perspective of an incoming owner and How would you negotiate and is the question that's come in? Right. So great question. I have since dealt with several business transactions since purchasing martinis And this is a very normal thing that comes up fair as an eye of the beholder And so for me on the buyer side, which is what I've always been won't been currently It's coming to What What the bank is really going to value because at the end of the day like I'm not coming in with a cash sale I'm coming in with financing. So it's very easy to kind of fall back on the bank Of this is what the bank is saying. This is a legit Value that they will fund And you know not to insult your business not to say it's less not to say, you know, it should be more and I'm getting a great deal It's just this is what is seen as fair at this point and it either works for you or it doesn't I also really preach that you do not get emotionally involved with the sale until it closes And that's so easy to do because you want to get excited as soon as you have a Contract agreed upon you're like, oh, we're doing this and she's like, no nothing's done until you leave that closing table So fair is in the eye of the beholder And really as a seller, I think you really look at what if you're doing asset or a stock sale And then finding the right buyer It definitely can't be something that you can rush into a sale with if you're looking to get top dollar You're looking for the right buyer the right situation business sales are not easy We talk about there are Many considerations as a seller and a buyer, you know money is just one of them employee culture The speed of the transaction the tax efficiency of the transaction Are they going to change the name? Are they going to keep your employees? These are all things that get stirred around money is just just one part of them You mentioned the bank and since I happen to work for a bank I do think that is a pretty important thing for people to know is Banks generally in the small business community are collateral lenders And so you're going going to have to have some collateral to to prove the transaction The sba though does provide some financing opportunities and There are some government programs that do work And so if you're willing to invest in a little bit of a Longer timeline the sba will guarantee a portion of the transaction to the bank And so the bank may be willing to take on some more risk If the sba has the guarantee there and so for anybody that's listening And if you're thinking about a transaction if your bank whoever it might be is connected to the sba There are some really good financing opportunities out there Nate we had a question that was for you Let me pull this up Maybe help define what an arms link transaction is What parties should be involved to help maintain For both the buying and selling sides and I might be able to chime in with you here a little bit on that But define the arms link transaction and kind of think about both the buyer and the seller sure maybe that second part is easy to define We involved our accounting firm who happens to be an industry expert Law firm lawyers to drop the papers it wasn't owner finance So my parents were taking on a little bit more risk, but it's in the family You know they were comfortable with that And then and then us too. So it was the accountants and the You know the law firm I think if if we were to involve outside financing and be that financer or whatever bank Was involved in that transaction. I've heard too. There's mediators to sit in in between, you know the the two parties if That we didn't require that but I think involving those two parties to bring some legitimacy and then arms link transaction I think I guess I just Uh contrast that to something that was just like A a wink and a nod and a handshake. You know, it's like here you go. This is the business. Here's the keys And um, it was it was a formal process, you know timelines and Written papers and and all of that. So I think it was it was an approach that we adopted early on Yeah, embracing some of that formality as as much as is counterintuitive to a lot of entrepreneurial genes in some cases That helps with that arms link right and it wasn't natural for us Like you know, my my parents and I were we're a little bit more cavalier. We're we're you know So it was it was an approach that we had to adopt and become comfortable Did you each have your own legal representation? You know, we we didn't I could see I entertained that I definitely thought Thought about that. What I did do was take the papers to Sort of a family friend who was viewing it just from my perspective to to make sure that everything read You know clearly so they weren't at the table, but they were Viewing it from my perspective. Okay. Yeah, um, which yeah, which was which was helpful. I think So we've got a final question here. It's about family transitions and how do you keep business from being personal with family transitions and Nate, I'll I'll let you answer that and I'll just maybe offer a little bit of a leading entry into that The way that we think about family businesses is that your family first and in often cases there are non business family members And so we try to coach businesses to not have family conversations at the dinner table When there are the non business families around having boundaries is a really good thing And so maybe you could talk about that a little bit Just keeping business from being being too personal and then we'll wrap it up. Yeah You know, so my mom is working in the business every day with with me and Our love language with each other is arguing That's just how we that's how we operate and I think our our staff has become used to it You know first when we hire people, but I think it's always It's always keeping that perspective. I think a lot of times and My mom and I just got back from a business trip Kind of a trade organization in phoenix and On the way back I said to her I'm like mom There's so many things that I want to do in the business the ways to improve operations and expand and and All of this stuff and it's feels sometimes like we're just on this treadmill going somewhere And I want to I want to recognize how much fun it is to be with you here now You know in this moment like we just got to take a cool trip Together her and I and and have that kind of kind of moment. So I think it is important to keep that keep that perspective and and You know just just recognizing that the relationships That's what I'm going to have in 50 years, right? May or may not have the business in the way that it is But I'm going to I'm going to have the relationships and that's That's important man. That's so cool. Yeah I I did not grow up in a family business of ownership, but I had the opportunity to Work in a third generation family business with three generations of our family that had been inside there And it is such a rich experience when you get the opportunity to work with your family And my grandfather recently passed away and I talked about that during his eulogy And just those moments of shoulder to shoulder time are just so special and the rich opportunity that you have there Is just something that not everybody has that that opportunity So we're going to wrap up the first thing I want to say is thanks to both of you I really hope that this has been valuable for people that are live and in going to be watching this later This is being recorded. So we also want to thank the longmont chamber of commerce for organizing this In the public studio here has been pretty cool as well. Nate was able to bring some flowers If we do this again, might I suggest martinis in the morning? That might be I could kind of sense a little ongoing conversation martinis in the morning Which we could talk about a lot of things. Yeah, I think that this could go on And so it was our hope as we close here that there were three things three insights that we wanted to bring The first was the timeline The timeline of your guys's transitions were a little bit different, but not all at once And so if there's anything that we've experienced at fmbo and the dozens of businesses that we work with Go back to the timer that I talked about It's maybe not so much about the time as it is just incremental progress We're not going to solve a succession plan Immediately all at once make one decision make the next decision and just celebrate the incremental progress The second was about transferable value one of the things that we commonly see is owner dependence Reduces the value of a business if it depends on you being in there 40 to 60 to 90 hours a week and you go to sell it There's so much less value than if people are doing handling the business operations day to day and I know that's so Difficult for a small business owner to think about but but but they can't and so you talked about this If just embracing teaching them taking them that extra hour to show them the standard That maybe you represent but not actually you as the human and so transferable value building yourself out of the business is actually Really helpful increasing that transferable value There's lots of factors that go into the price. We talked about that asset sale Stock sale one of the things that we would recommend is getting some kind of valuation Wherever you're at in your transition You can pay 10 to 15 thousand dollars some advisors do it for free Just as a back of the napkin and then extrapolate that out If I sold it for this and I paid this kind of amount of taxes would this work to fund my retirement There are so many factors that influence value and so to understand any planning gaps earlier is better So timeline celebrating for mental progress Build yourself out of the business if you can the sooner that you know the value the better And the way that we started this was all exit planning is just good business planning And so if you don't know your transition, whether it's internally whether it's to a family. Maybe it's externally Hopefully you heard some things today that there's one decision that you can make And so there's something that I just want to close with I think Nate and Sarah you guys both talked about this But nobody is going to anoint you today to make this decision And so I want to and so if there's something that's holding you back If there is a person inside your company that you think might be the best buyer talk to them Have the conversation now We have a customer now that when they told their their key employee That they were thinking about selling they said well if you're thinking about selling I'm probably going to go ahead and leave as well And now we have tremendous value deficit because now their number two isn't isn't interested in taking over And they want to leave the business if they were to sell And so if there's one thing holding you back if there's something that you're being kind of It's in the top of your mind right now. No one will tell you to do it except for right now Make one decision have one conversation And so I want to thank Nate and Sarah for joining us here on succession strategies We hope that this has been valuable. Thank you for the Longmont public media as well Have a great day