A Great Conversation with Robert Plank Marketer of the Day Show

 

About the Show:

In this episode of Marketer of the Day, we have David Barnett, an author, speaker, educator seminar host, consultant, and a business buy and sell coach. He guides people all over the world who want to buy or sell companies. David has written a variety of books and educational courses for small businesses. One of his books has become a best-seller on Amazon. He also consults with company leaders on how to develop their operations, administration, and processes. In this episode, we'll talk about how to start a company, get started, and cope with mistakes business owners make. We'll also go into the advantages of owning a company and how the pandemic changed the business world.

Small Business Mergers

 

***New Video Alert!

Craig wants to merge with another small business by issuing stock and getting the assets.

How does he do this?

In 10 years of video production, I can’t believe I haven’t made a video about mergers yet!!

Check it out right here: https://youtu.be/PKzBVwIKG5A 

Cheers

See you over on YouTube

David C Barnett

LIVE- Henry Lopez Strategic Plans for Small Business

What do you plan to get done this year?

Returning Livestream guest- Henry Lopez

I’m happy to have Henry join me on a live broadcast. He has many years of small business experience including several startups and exits. Tune in and as we’ll be discussing how small businesses can create a realistic strategic plan. He’s actually got a tool you can download to make it easier. This is a ‘must see event’ for business owners or people who plan to be there one day. Find Henry on Linkedin here: https://www.linkedin.com/in/henry-lopez-9758524/ or his podcast here: https://www.thehowofbusiness.com/

When Should You Hire Your First Employee?

 One of the biggest challenges for small business owners is determining when to hire their first employee. As a startup owner, you may be managing everything on your own, but there comes a point when your workload becomes overwhelming. How do you know if it’s the right time to expand your team? This guide will help you decide when to take the leap and make your first hire. https://youtu.be/qZ_16gRcO00 

Step 1: Track How You Spend Your Time

Before making any hiring decisions, start by keeping a detailed time log. Track everything you do throughout the day, from answering emails and meeting clients to completing technical work. By documenting your tasks, you’ll gain a clear understanding of where your time is being spent.

Step 2: Categorize Tasks by Value

Once you have a record of your workweek, evaluate each task based on the value it brings to your business. A simple way to categorize your tasks is:

• $10/hour tasks – Basic admin work (e.g., answering phones, making copies, scheduling appointments).

• $100/hour tasks – Skilled technical work or direct sales that generate revenue.

• $1,000/hour tasks – High-value activities such as closing big deals or managing critical projects.

• $10,000/hour tasks – Strategic decision-making that impacts long-term business growth.

Step 3: Identify Tasks to Delegate

Most small business owners spend too much time on $10 and $100/hour tasks—work that could easily be delegated to someone else. If these low-value activities are consuming a significant portion of your time, hiring an employee to handle them can be a smart investment.

By delegating these tasks, you can shift your focus to revenue-generating activities, business growth strategies, and customer relationships—all of which drive long-term success.

Step 4: Overcome the Fear of Hiring

Hiring your first employee is a big step, and it can feel like a financial risk. However, it’s important to view it as an investment. If bringing in help enables you to close more deals, improve operational efficiency, and boost profitability, then the benefits will far exceed the cost of their salary.

The Power of Leveraging Others

Successful businesses grow by leveraging the time and expertise of others. Hiring an employee isn’t just about lightening your workload—it’s about maximizing your impact. By focusing on high-value tasks and delegating routine work, you’ll be better positioned for long-term business success.

Conclusion & Next Steps

If you’re spending too much time on low-value tasks, it may be time to hire your first employee. The key is to track your time, identify which tasks to delegate, and focus on work that truly contributes to business growth.

For more insights on buying, selling, and building businesses as well as 7 FREE gifts, sign up for our email list at www.DavidCBarnettList.com 

Awesome Interview with The How of Business - How to start, run & grow a small business Podcast

 In this episode of The How of Business, Henry Lopez welcomes back David Barnett, a business consultant, author, and speaker specializing in buying and selling small businesses.

David shares his expert insights on the advantages of buying an existing business versus starting one, the common mistakes buyers make, and how to structure a business acquisition for success.

He also discusses his latest book, Buying vs. Starting a Business, and offers practical advice on evaluating business opportunities.

Trump Tariff Impact on Small Business Deals

 

***New Video Alert!

So, is free trade in North America is now over?

How will this affect small businesses.

How does it change due-diligence for buyers?

How will it impact your plan to sell?

All this and more in this special new video

Check it out right here: https://youtu.be/bwO-LipmzOU 

Cheers

See you over on YouTube

David C Barnett

PREMIERE- Michael Jacobson Disrupting the flower market

 

Disrupting the Flower Retail Market- Interview Premiere

New Premiere guest- Michael Jacobson- French Florist

I’m happy to have Michael join me on a live broadcast.

He’s got a story to tell you about how he came to own a flower shop and how he grew it to several locations before heading down the franchise path.

AND- why flower retail is so ripe for innovation and disruption.

Tune in and as we’ll be discussing the retail flower industry and why it might be a great opportunity for someone.

This is a ‘must see event’ for people who like technology, marketing and are ‘industry agnostic.’

Set yourself a reminder on YouTube here: https://youtu.be/0L0OwsTOBCY 

The interview plays live Monday February 17, 2025 at 1PM Atlantic Time and 12 Noon Eastern Time

See you there!

David C Barnett

Selling Your Business to an Employee: Is It a Smart Move?

 When it’s time to sell your small business, one of the biggest questions is whether selling to a long-time employee is a good idea. At first glance, it makes sense—they already understand the business, know the customers, and are familiar with daily operations. However, the reality is more complex. https://www.youtube.com/watch?v=ODZF3gTeETc 

In this blog, we’ll explore the pros and cons of selling your business to an employee and discuss better alternatives to ensure a successful transition.

The Difference Between Small and Mid-Sized Businesses

In larger businesses with structured management, employees often have clear roles, make decisions, and manage teams. These individuals may have the skills and mindset needed to transition into ownership.

However, in most small businesses, the owner retains control over all critical decisions. Employees, even those with managerial titles, may primarily focus on completing tasks rather than developing strategic vision or taking full responsibility. This lack of entrepreneurial experience can make it difficult for them to succeed as business owners.

The Risks of Selling to an Employee

From experience, I’ve seen multiple cases where business owners sold to long-time employees who later struggled and failed. The key issue? These employees lacked the core traits of a successful entrepreneur, including:

• Decision-Making Ability – Business owners must make high-stakes decisions regularly.

• Responsibility & Stress Management – The role comes with financial and operational pressures.

• Ambition & Drive – Successful entrepreneurs have a strong desire to achieve and grow.

Many employees thrive under direction but struggle when placed in the role of an owner, where they must drive the business forward.

A Better Alternative: Consider Past Employees

Instead of selling to a current employee who may lack entrepreneurial ambition, consider reaching out to past employees who left the company for greater opportunities. These individuals already know the business but demonstrated ambition by seeking new challenges.

A former employee who moved on, gained more experience, and built financial stability may now be in a position where buying your business is an attractive opportunity.

Finding the Right Buyer for Your Business

If you’re considering selling, take the time to evaluate potential buyers beyond just convenience. Selling to an unprepared buyer can lead to failure, impacting your legacy and the long-term success of the business. Instead, look for individuals with a strong entrepreneurial mindset, whether they are former employees, industry professionals, or external buyers.

Ready to Sell? Get Expert Guidance

If you’re thinking about selling your business, visit my website for valuable resources, including “12 Things to Do Before You Consider Selling Your Business.” (FREE to email list subscribers) You’ll gain insights into preparing your business for sale, finding the right buyer, and ensuring a smooth transition.

Be sure to join my email list if you’re not on it already at https://www.DavidCBarnettList.com and receive 7 FREE gifts to help you on your journey!

Exceptional Customer Service and Getting 5 star reviews

 

***New Video Alert!

You want more 5-star reviews for your business?

You need a delivery process that you can work on.

It’s an extension of your marketing funnel as it’s all about setting customer expectations.

I give you some thoughts about how to work on this in this week’s video.

Check it out right here: https://youtu.be/7Z0hK4sNM5k 

Cheers

See you over on YouTube

David C Barnett

PREMIERE- Mike Finger- Online small biz value calculators

 Can you learn the value of your business online FREE?

New Video Premier interview guest- Mike Finger.

I’m happy to have Mike join me again on a live broadcast.

Mike works with business owners and helps them get their business ready for sale.

And- he knows what he’s doing because he’s sold four of his own businesses.

Tune in and as we’ll be discussing online business value calculators.

This is a ‘must see event’ for business owners who want an idea of what their business is worth.

Be sure to join the premier live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtu.be/hap_hJV78Ro 

We’ll be going live Monday February 10, 2025 at 1PM Atlantic Time and 12 Noon Eastern Time

See you there!

David C Barnett

Demystifying Leveraged Buyouts (LBOs): Can You Buy a Business with No Money?

 This week, I’m addressing a thought-provoking question from my viewer, who commented on one of my YouTube videos about buying a business with no money. He believes that anyone with some brains can structure a deal without using their own money—otherwise, leveraged buyouts (LBOs) wouldn’t exist. So, let’s dive into the mechanics of LBOs and discuss whether it’s truly possible for someone with no money to pull this off. https://youtu.be/UrBLOtRY0OI

What Is a Leveraged Buyout?

A leveraged buyout (LBO) is a financial strategy where a buyer acquires a business using borrowed money, with the target company’s assets serving as collateral for the loan. This concept gained widespread attention in the 1980s, thanks to high-profile deals and books like Barbarians at the Gate.

In simpler terms, it’s like financing the purchase of a car: you borrow money to buy the car, and the lender secures a lien on the vehicle in case you default on the loan. In an LBO, the business being purchased effectively finances its own acquisition through its assets.

How Does an LBO Work?

Here’s a step-by-step breakdown of how an LBO deal is typically structured:

1. The Buyer Sets Up a Purchasing Entity: The buyer creates a new company (let’s call it BuyCo) specifically for this transaction.

2. Assessing the Target Company’s Assets: The target company (SellCo) owns valuable assets such as land, receivables, inventory, and equipment. These assets are evaluated for their collateral value.

3. Securing a Loan: The buyer approaches a bank or lender and requests a loan to finance the acquisition. The lender agrees to provide the loan, but only on the condition that they receive a lien on SellCo’s assets post-acquisition.

4. The Merger: To secure the loan, BuyCo and SellCo must merge into a single entity (NewCo). This ensures that NewCo owns the assets and is simultaneously responsible for the loan.

5. Closing the Deal: At closing, the bank disburses funds to the seller via a lawyer. Simultaneously, NewCo grants the lender a lien on the assets. This complex process involves meticulous legal coordination to ensure everything happens simultaneously.

Challenges with LBOs for Individuals with No Money

While LBOs are a powerful tool, they are not easy for someone with no financial resources to execute. Here’s why:

1. Banks Rarely Finance 100%: Lenders typically don’t loan the full value of the target company’s assets. They account for risks by limiting the loan-to-value ratio, often requiring additional equity or subordinated debt.

2. Legal and Transaction Costs: Even a modest LBO can rack up significant legal fees. For instance, a $1 million deal I was involved in incurred over $10,000 in legal costs due to the intricate paperwork and coordination required.

3. Vendor Financing: Many LBO deals rely on seller financing or equity participation. Sellers may accept a note or shares in the new entity, but this still requires negotiation and often some upfront capital.

4. Strong Buyer Financials: Banks often consider the financial strength of the buyer’s existing company (BuyCo). If BuyCo has no assets or cash flow, securing the loan becomes far more difficult.

Can a Person Truly Buy a Business with No Money?

In my previous video, I addressed whether someone who is flat broke could buy a business using 100% borrowed money. The answer, in short, is that it’s highly improbable. LBOs work best for larger businesses with valuable assets and a financially strong buyer. For smaller deals or individuals with no resources, alternative strategies like equity partnerships or creative financing may be more realistic.

Final Thoughts

Leveraged buyouts are fascinating and effective for larger companies with significant assets. However, they require careful planning, strong financials, and expert legal guidance. For those interested in learning more about LBOs and other acquisition strategies, I encourage you to explore my online course on buying a business. It’s a comprehensive, self-paced program featuring videos, workbooks, and updates to keep you informed.

Be sure to join my email list if you’re not on it already at https://www.DavidCBarnettList.com and receive 7 FREE gifts.

Cheers!

David C Barnett

SmallBiz Exit Price Trap

***New Video Alert!

Tim is making an offer on a business and needs the seller to stick around for a year of training.

Where does the money come from for his salary?

Tim needs a salary too.

Cash flow conundrum. 

I’ll tell you your options and how you need to think about this scenario.

Check it out right here: https://youtu.be/rVi484Syae4 

Cheers

See you over on YouTube

David C Barnett

Avoiding Costly Mistakes: Understanding Double Counting Income When Buying a Business

 When buying a business, one of the biggest concerns is accurately evaluating its cash flow. Imagine thinking you’re buying a business with a cash flow of $200,000, only to realize later it’s only half of that. This mistake could be disastrous. In this post, we’ll delve into the common problem of double counting income, why it happens, and how to avoid it. https://youtu.be/64KgCW9I0wo

The Importance of Cash Flow in Business Valuation

Cash flow is the lifeblood of any small business. When buying a business, what you’re really buying is its cash flow, which determines its value. Accurate accounting and financial statements are critical in ensuring that you’re paying a fair price for the business.

Understanding Income Statements and Balance Sheets

To avoid falling into the trap of double counting income, it’s essential to have a basic understanding of two key financial documents:

1. Income Statement: This report shows a business's profitability over a specific period. Here’s an example:

• Sales: $100,000

• Cost of Goods Sold (COGS): $50,000

• Gross Profit: $50,000

• Overheads: $30,000

• Net Income: $20,000

2. Balance Sheet: This is a snapshot of a business’s financial position at a given point in time. It includes:

• Assets (what the business owns)

• Liabilities (what the business owes)

• Equity (the owner’s stake in the business)

The balance sheet always balances: Assets = Liabilities + Equity. The equity section often includes retained earnings and net income from the income statement.

The Problem: Double Counting Income

Double counting income typically happens when buyers misunderstand where money is coming from on the financial statements. Here’s how it can occur:

• A business owner takes money out of the business as dividends (recorded on the balance sheet under equity).

• The buyer sees the net income on the income statement and adds the dividends to it, mistakenly treating it as additional income.

In reality, the dividends are just the owner’s way of withdrawing net income that already exists on the income statement. Adding it back inflates the perceived cash flow and leads to overvaluing the business.

Real-Life Examples

In two recent cases I encountered, buyers fell into this trap:

• They asked the sellers how much money they took out of the business.

• Sellers mentioned amounts withdrawn as dividends.

• Buyers mistakenly added these amounts to the net income, effectively counting the same money twice.

The result? The buyers believed the businesses had significantly higher discretionary cash flow than they actually did, risking gross overpayment.

How to Avoid Double Counting Income

1. Understand the Financial Statements: Know how the income statement and balance sheet interact. Dividends and net income are not separate streams of cash flow.

2. Ask Specific Questions: When evaluating a business, ask where the seller’s withdrawals are recorded. Are they part of overheads, COGS, or equity (dividends)?

3. Work with Professionals: Engage an experienced accountant or business advisor who understands small business transactions to help analyze the financials.

4. Verify Adjustments: Ensure that any add-backs or adjustments to net income are valid and not simply a redistribution of the same money.

Resources for Learning and Guidance

If you’re navigating the complexities of buying a business, I offer resources and guidance to help you avoid costly mistakes. Visit www.BusinessBuyerAdvantage.com to learn more.

Conclusion

Double counting income is a common but avoidable error that can have significant financial consequences when buying a business. By understanding financial statements, asking the right questions, and seeking expert advice, you can ensure an accurate evaluation of the business’s cash flow.

If you’ve found this information helpful, please like and share this post. For more tips and insights on local investing, business buying, and financial management, visit my blog at DavidCBarnett.com 

Be sure to join my email list if you’re not on it already at https://www.DavidCBarnettList.com and receive 7 FREE gifts.

Cheers!

David C Barnett