Nov 3, 2021
In today’s episode, Nick sits down with friend and Bryker and Co founder, Josh Holley to discuss raising capital and selling your business.
The episode begins with Nick and Josh discussing how they met. They were training for a marathon together and Nick says that he learned a lot from training with Josh. A big part of Josh’s training was about learning restraint in his workouts and that was a big takeaway for Nick. When they started training together, Nick says Josh taught him a lot about business as well. Josh began his role in finance in the beginning of the recession in a restructuring firm. He thought he’d only be in the role for a couple years before transitioning back to a traditional finance role, however he stayed for seven years. He credits this time with accelerating learning and leading him to his current work of building finance and accounting into businesses.
Even before you get into raising money Josh says you need to understand the cash needs of your business. Nick agrees, citing a personal story of his own business needs as an example. More than fifty percent of the time, even in well established businesses, leaders are looking at the bank account as the measure of health and success when financial statements tell a different story. Josh stresses the importance of accrual accounting, whether you’re trying to better understand the business, raise capital, or sell the business. Nick and Josh both agree that there are a lot of parallels between marathon running and business building because both require pacing and endurance.
In the early days of growing your business, you may have small bank loans, but a large part of your revenue will come from friends and family. For these types of investments, Josh recommends a Safe Agreement. This will allow those close to you to invest in your business now and not discuss valuation until you get more traditional investors. Later, when you feel like your back is against the wall, this isn’t the time to raise equity, Josh says you should be looking to get creative and work with vendors and others to save money. Nick agrees, and adds that this is why relationship building is important to him and his business.
For business owners, Nick and Josh recommend an accountant as one of your first hires. This will allow you to move to building the business not being stuck in the business. As you prepare to sell your business, there are a few things that will help you seem more desirable to buyers. This will be things like practicing accrual accounting, tracking sales tax and one time expenses, as well as implementing a board. If you don’t have these things in place there may be doubt in investors or buyers minds. Having all this in place can help you avoid earn out at closing. These things are an expense, certainly, but Nick and Josh say you’ll earn it back with investment or buy out.
As the episode ends, Josh reminds listeners that when selling your business you have to keep the buyer in mind, and Nick stresses the importance of looking to the future rather than getting bogged down in the present.
Timestamps:
0:00- Nick introduces the episode and today’s guest, Josh Holley.
3:14 - How Nick and Josh met.
8:11- Josh shares how he came to investment banking.
13:47 - Common business problems Josh sees in his work.
22:08 - Josh discusses how to better understand your business.
36:56 - Safe Agreement
48:34 - The importance of accounting
1:03:14 - How to get ready to sell your business.
Links:
Follow Josh Holley.
Learn more about Nick Bare on his website.
Connect with Nick Bare on Instagram, LinkedIn, YouTube.
Learn more about Bare Performance Nutrition.