Are you contemplating selling your business or creating an exit strategy? It could be tempting to jump into the process of selling your business without hiring...
I Sold My Business – Dan Ness
There’s no substitute for the wisdom of someone who has been through the process of selling their business. You can learn a lot from the experience of someone who has “been there, done that,” like Dan Ness. Dan is now the former owner of a Miracle Method franchise in Northern California — a business he owned for over 30 years. When he and his wife got into the business, it was just the two of them, but they eventually grew their business into one of the most successful franchises in the country. Find out what Dan went through and what he had to do to get ready to sell on this special edition of “Deal Talk.”
Questions Answered For You
- At what point did you start to have these thoughts about making some changes in your life and selling your company?
- Was selling your company a difficult decision to come to grips with?
- When you came to the decision of selling your business, what was the first thing you had to do in order to get your company ready for the sale? How did you start the process?
- What was expected of you during the sale process to help get affairs in order?
- How long did it take from the time that Morgan & Westfield got involved to the time that you were able to close on the sale of your business?
“It's [the business] not part of our life, it actually was our life … I think a person just has to come to terms with the fact that if they want to sell, why are they going to sell? And is that decision good enough for them to give up their business?”
Key Takeaways To Remember
- If you are thinking of selling your business, you must determine the reason for putting it up for sale. Even though Dan Ness had developed a health problem that became his motivation for selling his business, he admitted the decision on whether to sell the business wasn’t an easy one. He and his wife, who was co-owner of the business, went through a lot of emotions.
- If you are planning to sell your business in the future, preparing now will help you later. Dan said that selling a business is different from selling anything else. You have to take care of a lot of paperwork, which can become overwhelming. Preparing for the sale by assembling necessary documents before the business is placed on the market can lessen the stress during the sale process.
- If you want the sale of your business to go smoothly, work with the people who can help make the sale process more efficient. Often hiring a professional for a particular job is not enough. Choosing whom to work with to facilitate the sale of your business is crucial, as the decision could spell the difference between a successful sale and one that is going nowhere. Look for those who have a proven track record of successfully selling their clients’ business.
- If you are motivated to sell your business, you must have persistence. Many things can go wrong during the sale process of your business, which may make focusing on the goal of selling difficult, but it is necessary. Dan is no stranger when it comes to dealing with unfortunate events, having worked with two brokers and having no buyers prior to approaching Morgan & Westfield. However, Dan did not give up but rather persisted in selling his business.
- If you are in the process of selling, patience should be your virtue. After your business is placed on the market for sale, you will not have much to do other than wait for buyer inquiries to come. Keep busy by driving up the revenue of your business while waiting for buyers. Be prepared to wait, as the sale process may take anywhere from several months to a year. Dan exemplified patience, as he waited three years from the time he decided to sell until he handed the reigns to his business to a new owner.
Jeff: A fellow entrepreneur shares his experience of selling his business. If you want to hear about what it's like to sell a company from a business owner in his own words, from his perspective, you've come to the right place.
From our studio in Southern California, with guest experts from across the country and around the world, this is “Deal Talk,” brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.
Jeff: Hello and welcome to the web's number one content source for small business owners committed to building a business for eventual sale. Here on “Deal Talk” it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can actually use to help you build your bottom line and improve your company's value.
It's always nice to talk to you about ways to drive value and help you prepare your company to put it in the best position for a sale that really results in a really nice profit for you. That's what it's all about. But I really do enjoy the opportunities that I have to speak with business owners who have definitely been there and done that with respect to actually selling their own companies. They've already had the experience. It really helps to kind of crystallize so many of the things that we talk about here on “Deal Talk” and it makes the idea of selling your own business more real in terms of what you could expect. Today, no exception. I'd like to welcome Dan Ness. Dan Ness with his Miracle Method business, having just recently sold that through Morgan & Westfield. Dan, I want to welcome you to “Deal Talk.” It's nice to finally connect with you and have you on the program.
Dan: Yeah. Thanks for inviting me. I'm looking forward to it.
Jeff: Dan, we thank you so much. I was hoping you might be able to kind of share a little bit more specifically what Miracle Method is and what you and your company did.
Dan: What we would do is go in and put a new finish over the top of existing fixtures like kitchen countertops, shower stalls, tile showers, bathtubs, and tile floors and cement floors.
The golden rule, it's one of the oldest rules out there, but it seems to be one of the most easily forgotten in today's business world.
Jeff: When you say “put a new finish on it,” exactly what do you mean? What kind of materials are we talking about?
Dan: Most of them are acrylic urethanes. Some of them are more of a custom blend like our Natural Accents was a simulated stone finish. So we would apply this finish over the top of tile countertops, or Formica countertops. It would make it look like a simulated stone or granite.
Jeff: Tell me a little bit about the history of providing that sort of thing. How long did you do that for Miracle Method?
Dan: I did it for 32 years. The company was 35 years old. I bought it when it was 3 years old.
Jeff: No kidding? That actually is a lot of time to be part of that franchise. And it is a franchise-oriented business, is that right?
Dan: That's correct. It was over half of my life.
Jeff: My goodness. How did you find out about that and why did you choose Miracle Method to go with all those 32 years ago?
Dan: Well, it started with my brother-in-law. He bought a franchise in Sacramento, California. My wife and I, that was her brother ... so my wife and I wanted our own business and couldn't open up the type of business I wanted to. It was just going to cost too much money at the time. And the opportunity came up to buy this location. The owner had put it up for sale, so we moved up here and bought it.
Jeff: You made it sound like it was kind of a pretty easy decision that you came to and order to do this. Did you already have a number of customers and contacts in your database that you could go out and start selling to right away, or was this one of those types of things where you came in and you kind of had to reinvent the process a little bit? Knowing of course it's a franchise, so you've got support from the company. But just kind of tell us what it was like when you first got into it and what you had to do in order to start drumming up business for the first time.
Dan: I actually had work on the books. It was an active company; it was an owner operator. He had had a couple of employees at one time and did not like the idea of having employees and just didn't want to work. He wanted to get into something where he didn't have to work this hard. It was actually he worked on a book, he had enough material for X amount of jobs. We stepped right into it and started making money immediately.
Jeff: How much of it was hands-on for you, in the beginning, Dan, to kind of understand not only just how the process worked and what it is that you needed to know from a business owner's standpoint about the business and how the Miracle Method worked and what you had to do? But how long did you actually have to go out to these households and perform the work yourself before you were able to build your business and the number of people that you needed to be able to go out and do most of this stuff for you?
Dan: It took from ’84 until 1990 before I came out of the field as actually doing work. In ’90, I went into estimates full time, so I didn't do any of the actual scrubbing the tubs, as we called it. So we have built up enough employees that I could afford to not actually produce money but I could go out and sell and get more work on the books.
Jeff: But your eyes were wide open because you knew that in the beginning you were going to have to do a lot of the labor yourself, is that right?
Dan: I did all the labor. In the beginning, I was the only technician until we hired our first technician. It was all up to me. I learned how to do everything and never stopped.
Jeff: Tell me, Dan, before you got started with Miracle Method, what else did you do before that?
Dan: I was an auto mechanic.
Jeff: OK, very good.
Dan: And the type of business I was going to try to open up was a mechanic shop.
Jeff: Oh, it was, OK, very good. And what was it really that kept you from doing it? Is it just that this one opportunity with Miracle Method happened to present itself at the proper time and seem like a better, more turn-key kind of a situation?
Dan: Yeah. It was all timing. To open up an automotive shop, the type I wanted to open up, was going to be $100,000 at the time. And this business was under 20 grand to step into it, so we just did the math and went, "OK, this is the way to go."
Jeff: When you really think about it, stepping back 32 years ago, $100,000 to open up your business then, a mechanic shop as an auto mechanic, that seems like a lot of money even today in terms of yesterday's dollars, doesn't it? You had to really be absolutely pleased then when the Miracle Method thing came along?
Dan: Oh yeah, we were tickled to death. We were able to just step right into it.
Jeff: Very good. Rumor has it, I don't know how true this is, so I'm going to throw it over to you, that you're somewhat of a legend among the Miracle Method franchisees. Why is that? I'm just kind of curious. Is it just because longevity you kind of hung in there as long as you did, or because of sales? Kind of share with us where we kind of receive that and why you're kind of ranking a high among those Miracle Method owners.
Dan: We're the fourth oldest franchise out of, right now, about 138. We were always in the top five production levels, so we were always one of the big boys.
Jeff: In terms of revenue and what you guys did over the years, what was your best year, do you remember?
Dan: The best year was 2006.
Jeff: Which was right at about the time when the housing market started to show its first signs of some fatigue there before that market started dropping away. What did you do?
Dan: In 2006 we did one and a quarter million. And by 2009, before it turned, we were only down about 250-300 grand in total.
Jeff: Wow. Did that surprise you? Just the amount of success that you were able to have, were you actually moving toward that and you knew that that was not just possible but likely?
Dan: Yeah, I knew it was likely. We have a fairly recession-proof business or resistant business. A lot of it is a necessity instead of a luxury. And it isn't a super expensive type process to be done as compared to replacements. So that's what carried us through, plus our customer service. Our customers that used this repeatedly where dedicated because of the way we took care of it.
Jeff: If I'm a homeowner and I have to make a choice here, I know that there are some improvements I need to make. Maybe I've got a countertop that's just fallen to pieces here and I've never liked the tile very, very much. Or if it's not falling into pieces it's kind of looking old and in a state of disrepair. Maybe it's looking a little aged and a little backward, and so I want to make some improvements. But I can't afford to go out and get myself a slab of granite or buy Corian, some of those other surfaces. And now they even have that one product that is like a slab that actually can be installed, dropped on top of a counter now, but I can't afford those. I would call a company like yours out because you provided a low-cost alternative to upgrade what I already had but make it look nice and to give me something that I could look at and say, "I'm proud of this," and it was a substantial upgrade over what I had before.
Dan: Absolutely. The cost difference between our refinishing and replacement was about 75% difference.
Jeff: Wow, 75%?
Dan: Yeah. We were about 25% of replacement cost.
It is a hard decision to make, and I think a person just has to come to terms with the fact that if they want to sell, why are they going to sell? And is that decision good enough for them to give up their business?
Jeff: Unbelievable. I'm talking with Dan Ness. Dan Ness sold his company recently and owned a Miracle Method franchise. We're getting to know a little bit about his business here and in just a few moments we're going to shift gears a little bit and we're going to talk about the sales experience that he went through and that he had in selling this company. I know you're probably really looking forward to that part of the conversation. But Dan, just before we step away for a short break here, tell us about some of the challenges you went through in growing your company. What was it about growing your business that was most challenging for you and that maybe if these particular challenges weren't necessarily unexpected they were certainly the types of things that made maybe running your business, owning a business, not quite as much fun as you hoped it might be?
Dan: Yeah. The main challenge was acquiring and keeping good employees. After that, if you could keep the good employees, the next challenge would be like OSHA, or the fire marshal, or the EPA, or DEQ, or any of your other associations that have nothing better to do than to come in and make it difficult for companies to do business.
Jeff: And so that's kind of a constant battle that you're having to kind of wage in your business pretty much each and every day and having to worry about that. So keeping those employees happy, how was it that you found a way to do that? Was there a secret sauce or a formula that you found to be able to take care of your personnel so that the best people would stay on board and help you make that company successful as you did?
Dan: Yeah. I think the most important part was being ethical. So we treated them like they were human beings and we treated them like we wanted to be treated. We made sure that they were being paid a fair wage. It got into a situation where they needed favors, within reason, we would allow the favors and basically just taking care of people.
Jeff: It sounds like you have kind of hit on something that while it may sound simple to people, it seems to be kind of a lost art, if you would, or even lost science if you want to call it that. And we're starting to find out for more and more individuals like yourself, Dan, that really is key when you get down to it is treating people the way that you would want to be treated. The golden rule, it's one of the oldest rules out there, but it seems to be one of the most easily forgotten in today's business world. I'm talking with Dan Ness. He's the former owner of a Miracle Method franchise. And in just a moment when we return, we're going to talk to him about the experience of selling his business. We've already talked about his company. He's kind of laid out his reasons for all the success that he had, and we've talked about all that. But now we want to get to the transactional part of it, what led him to sell and really just the experience at the end of the day that he had in the process of selling his own company. And that is our conversation with Dan Ness, and we're going to hear more from him when “Deal Talk” returns after this.
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It was just a pleasant experience. Of course, I was apprehensive with paying some money upfront, but it was nowhere near what we paid with the first broker. That was alleviated because within a week, we had buyers just coming out of the woodwork.
Jeff: I'm Jeff Allen with my special guest Dan Ness, former owner of a Miracle Method franchise, and we're talking to Dan, getting it in his own words his experience in selling his company, and as it turns out, sold it through Morgan & Westfield. Dan Ness, again, I appreciate you joining us today. Very successful Miracle Method franchise, you built this business up. At what point did you start to kind of start to have these thoughts about making some changes in your life and maybe selling your company?
Dan: I had a situation that caused a whole bunch of stress, and I developed some health issues. So in trying to work through that I had to rearrange my company a little bit and had somebody to take my place and do estimates, but I couldn't go out in the field anymore.
Jeff: I see.
Dan: So we basically decided that now's the time to look at sales, show that I can retire and not worry as much or have as much stress, and this would probably alleviate the health conditions. That was about three years ago and that's when we decided to put it up for sale.
Jeff: When you decided to do this, you have some health issues, but was it kind of a difficult decision to kind of come to grips with? We hear so many times, Dan, that many business owners find it difficult to separate themselves from their company, that it's part of who they are and it's something they look forward to doing when they get up in the morning. And sometimes it's the last thing they think about before they go to bed at night. Or was the fact that you had to maybe make these changes in your life, was it easier for the fact that you were suffering from some physical problems and that kind of made the decision easier to kind of get out from under your business?
Dan: Yeah. That's pretty much what happened. The health issues made it easier. It wasn't easy. I'm not going to say it was. We just sold it and it was done. There's a lot of emotions there that I went through, and of course so did my wife. She was 50% owner too. We both went through the emotions of what are we going to do after and is this the right choice? Because the business was our life. It's not part of our life, it actually was our life It is a hard decision to make, and I think a person just has to come to terms with the fact that if they want to sell, why are they going to sell? And is that decision good enough for them to give up their business?
Jeff: Interesting thoughts, and we've heard the same for many people. In fact, Bo Burlingham is an author we had on this program, author of “Finish Big,” talked about that it seems that there are those who like you say they have difficulty coming to grips. And even after they sell their company, they have trouble being able to come grips with it far down the line because they're not sure exactly what it is that they're going to do after it's all said and done. You've kind of gotten past that of course, and we'll get to that here in a minute. So you've made this decision to sell your company, what was the first thing that you did? When you came to the decision, what was the first thing you had to do in order to get your company ready to do? Was there a call that you made to someone in particular? How did you start the process?
Dan: We started looking for brokers. And there wasn't anybody referred to us or anything like that. So just by the seat of our pants we found a broker and listed the company, did all of the paperwork that they wanted us to do, paid the money upfront for the advertisement and everything. And then a year later we had no buyers whatsoever. So we found what we thought would be a better situation, which is an actual franchise broker, and that turned out to be just about as big of a mistake. It didn't cost us any money, but it cost us a year in contract.
Jeff: So are you saying that you went through a two-year period where you really didn't have any satisfaction at all working with either of these first two business brokers?
Jeff: We know that obviously you didn't have any buyers, but was there a reason do you think behind this that you weren't getting calls? Anything at all that you can maybe share with us, maybe some thoughts or just some ideas about why this didn't work out for you?
Dan: I think it's because it wasn't advertised. I don't think they went through the type of advertising campaign that Morgan & Westfield does. It's the only thing I can think of because they brought us absolutely nobody.
Jeff: At what point did you contact Morgan & Westfield?
Dan: What happened is I went to national and talked to them about why wouldn't they help us sell. And they decided they're going to get on board and help the older franchises sell or a franchise that wants to sell. So somehow they found your company and that's how we found it was through our national company.
Jeff: When the folks from Morgan & Westfield gave you a call then responded, tell us how that conversation went and how things kind of got ... why it stood out to you that maybe you might be dealing with a better situation?
Dan: Well, number one the referral, which we had never had a referral for any kind of a broker. So the referral from national about how good this company was and what this company Morgan & Westfield wanted to do for our franchise chain for the franchises that wanted to sell. That was a good experience in itself. Dealing with Jacob, who we dealt with, the guy was fantastic, he was friendly, he was knowledgeable. He didn't try to pound sand. It was just a pleasant experience. Of course, I was apprehensive with paying some money upfront, but it was nowhere near what we paid with the first broker. That was alleviated because within a week we had buyers just coming out of the woodwork.
Jeff: Within a week?
Jeff: So there was a little upfront money but that was something that paled in comparison to what you paid to the other company. And then, of course, the thing that made it even better was then in a short space of one week you were already getting people lined up to make an offer for your business. Tell us what it was that you had to do in terms of working with Morgan & Westfield on your end. What was expected of you and your wife in order to kind of help get affairs in order?
Dan: Of course all of the paperwork. There is a bunch of paperwork that has to be done. So that is time-consuming. You have to figure out what your business is worth and that is all depending on how much money you actually make. So doing all of your add-backs and figuring out what money you use personally that the business pays for, your perks and all that kind of stuff. So there's a fair amount of work on that. Other than that, it's just basically figuring out what it's worth and when they buyers come in, screening the buyers. Morgan & Westfield pre-screened them, but then pre-screened them even more before you set up the actual physical meetings with them.
Jeff: OK, very good. Tell us about, if you would, their availability. If you had any questions at all that came up and particularly during the preparedness stages where you have to get this documentation together and you have to provide all of the information that they're looking for in order to put together a proper appraisal for you, were they available to answer any questions to help you get exactly what it was that you needed in order to help them do their job?
Dan: I think in the beginning we were either emailing or calling Jacob daily. So they were very available, more so than the other two brokers, I went through before.
Jeff: Once you knew that there were some pre-screened buyers out there, tell us about the process after that. You know that there were buyers and you had to kind of talk to each of those folks who have interested yourself, is that correct? Or did Morgan & Westfield do all of that for you and you just kind of looked over their credentials and their qualifications, and then you kind of got back to Morgan & Westfield and then they related back over to the buyers? Tell us how that whole process worked.
Dan: No, actually they would pre-screen the buyers to make sure they were financially able to purchase a business. And then they would get that person in contact with our national office and our national office would get them in contact with us. So I met with four or five serious buyers, one actually wasn't a purchaser. So the ones that weren't that serious are the ones that we didn't set up meetings with, we handled them through phone calls.
Jeff: From the time that Morgan & Westfield got involved to the time that you were able to close on the sale of your Miracle Method franchise business there, Dan, how long did that period take?
Dan: About a year.
Jeff: OK. And you were prepared to kind of wait out that period of time to kind of let the whole process play itself out. So that wasn't too surprising in terms of a reasonable amount of time to expect for that whole process to close?
Dan: Yeah. In selling a business, which is completely different than selling anything else, it is very time-consuming. There are policies or procedures that you have to go through, your letter of intent, and all the back and forth on all of that kind of stuff, definitive purchase agreements ... Morgan & Westfield really, really shined when it came to helping us through all of that paperwork stuff. But like I say, selling a business is not like anything else, so be prepared.
Jeff: Dan, we're kind of winding the program down here. I have just a couple of questions for you, and then we'll kind of wrap things up. Was the process of selling your business, did it go as easily as you expected it to, or was it surprising in terms of the twists and turns and the amount of time that it did take, and the amount of work that you yourself had to do in order to get it ready?
Dan: Well, we really were not prepared for the amount of work that it does take. So looking back, it wasn't as difficult as we thought it was at the time. And I think that's because of Morgan & Westfield.
Jeff: And so you're basically saying that your experience all in all then, I would guess, was fairly satisfactory in terms of the experience that you had with Morgan & Westfield and the experience of selling your business overall. It went about as smoothly as you could possibly have expected? How would you put it in your own words?
Dan: I would say it went as about as easy as I expected it to once it all came together. But as far as for what Morgan & Westfield did, I was more than satisfied. I was actually referring them before we sold the business. They were that easy to work with.
Jeff: So you were actually referring Morgan & Westfield to other fellow business owners who might have an interest in selling their companies down the line?
Jeff: Wow. So that's pretty high praise then actually, Dan. And so far, how has everything gone for you? A business is closed, you've sold it, you've made that transition to your post business owner life. How's everything going for you? What are you doing now?
Dan: We're not doing a ton, but we're planning trips. We've taken a couple of trips, and we're planning a couple more, so we're kind of getting prepared for that. I'm kind of enjoying retired life.
Jeff: I don't see anything wrong with that.
Dan: To me every day is Saturday.
Selling a business is not like anything else, so be prepared.
Jeff: That's got to be fantastic. Sometimes you have to go and check your calendar just to make sure you're on the right day. So at the end of the day then, I guess, you would recommend Morgan & Westfield to anybody who is interested in getting an appraisal or selling their company, is that correct?
Dan: Absolutely. They would be the first ones I recommend.
Jeff: Dan Ness, I appreciate you taking time out of your now retired life schedule in chatting with us a little bit about your company, about the experience you had in becoming a successful Miracle Method franchise, and about the experience that you had afterward in selling your company. And we wish you and your wife nothing but the greatest for success in starting a new chapter in your lives.
Dan: Thanks. I really enjoyed going on the show.
Jeff: Thank you again. That's Dan Ness. He's a business owner and former Miracle Method franchisee joining us today here on “Deal Talk,” and we want to thank him very much for his appearance. “Deal Talk” is brought to you by Morgan & Westfield. We hope that you tell a friend about this program. You can listen to this particular podcast and all of our podcasts at the morganandwestfield.com website, where you can also find full transcriptions of all of our shows. And if you go on the road or you're looking for other channels, you can also find us on iTunes, Stitcher and Libsyn.com as well. Once again, my name is Jeff Allen. I appreciate your listening to our program today. We also want to thank once again Dan Ness for joining us, and we hope that you'll listen to us again real soon.
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