How to Buy a Business | The First 10 Steps To Buying A Business with Canada’s Highest Rated CPA, Josh Spurrell

Audio Transcription

Speaker 1:
If you want to buy a business, today’s show is the show for you. We are joined today with the highest rated and most reviewed CPA in all of Canada. Josh Berle shares the first 10 steps to buying a business.

Speaker 2:
Some shows don’t need a celebrity in the writer to introduce a show, but this show does too, man. Eight kids co-created by two different women, 13 moat time, million dollar businesses. Ladies and gentlemen, welcome to the thrive time.

Speaker 3:
Sure.

Speaker 1:
What

Speaker 3:
[inaudible] yes, yes, yes. And yes. Thrive nation. On today’s show, you are going to be entering into the dope

Speaker 1:
Joe of mojo from the top CPA and all of the great country of Canada. Josh Sperl, welcome back onto the thrive time show. How are you

Josh Spurrell
doing? Great clay, thanks for having me

Speaker 1:
man. We are fired up to have you on the show. And just for the listeners who don’t know about you yet, how did you and I first meet each other? Just for the listeners can have a little bit of context.

Josh Spurrell
I found you on Google clay and uh, I, uh, we, we flew out and uh, you know, our conference in Tulsa there.

Speaker 1:
So you found us on Google. And then after finding us on Google, um, you came to the conference on a scale of, uh, you know, one to 10, 10 being the wet, uh, the best and one being the worst. How would you rate the, the conference you attended cause you have attended quite a few conferences during your business career?

Speaker 5:
Yeah, I, I like attending conferences. I think it’s a good way to get information, but often, you know, the problem with conferences is there’s, you know, one good idea a day and you know, I thought you had at least one good idea an hour out there in Tulsa and you could see it from the NRA and delivered when I got there.

Speaker 1:
And, uh, then after that we started working together and uh, how long have we worked together?

Speaker 5:
Oh, we’ve worked together for a almost two years now. Clean

Speaker 1:
the best two years of my life. I’ll tell you what, I love it. And how much have you grown over the past two years?

Speaker 5:
We’re about 50% girls. 50%

Speaker 1:
50% growth. Okay. So 50% growth over the past two years. It’s been a win win relationship. And you are an expert in accounting and now you’re a Canadian CPA. What’s the difference between being a Canadian CPA and US-based CPA?

Speaker 5:
Uh, most of the differences are taxation related. So when it comes to the actual accounting, it’s very, very similar no matter what country on the planet you’re on. The accounting is very similar. It’s the taxation difference from country to country.

Speaker 1:
Now you are Canada’s highest rated and most reviewed, uh, CPA up there. How long have you been an accountant?

Speaker 5:
I’m coming up on, I’ve had my firm for nine years. I’ve been in public practice for a little over a decade now.

Speaker 1:
Are the taxes higher up there?

Speaker 5:
Um, they are now, yes. Our, our, our corporate rate, like our big corporate is, is 27%, which is higher than what you guys are dealing with right now. We actually have the distinction in Alberta being one of the cheapest places in North America up until a boat, well, three years ago we called it the Alberta advantage. So we were 39%, which was our top marginal rate, which kind of put us in line with, you know, kind of flora type of thing. Um, but you know, uh, the, uh, uh, the liberals like to take that sort of advantage away.

Speaker 1:
So with the, with, uh, so now that they’ve taken the, that away as the economy gotten better or worse up there

Speaker 5:
used to have, has gotten worse predictably. It’s amazing that this social experiment has been run over and over again in history, in various countries. And it always ends up with the same result. Um, you know, people, people tax the rich, they think cables will charge more, more taxes for the rich, but they forget that, uh, you know, uh, when you tax rich people that they didn’t get rich by, by accident, they engage in tax planning, they become unmotivated and they stop, uh, you know, creating wealth and they, they moved from jurisdictions and that’s what happens in it. Even when it erodes the tax base for everybody eventually.

Speaker 1:
Is the unemployment rate higher in Canada than it is in the United States?

Speaker 5:
Yes. Yeah. I think there was a pretty good tweet exchange awhile back from uh, uh, team Trump to a team, Trudeau and he was, he was kind of trolling Trudeau on the job

Speaker 1:
back in November. Yeah. So I just want to make sure that listeners get this. You’ve been an accountant for how many years now? How many years have you been doing this?

Speaker 5:
Uh, I, I’ve been an accountant and 2008 for 12 years.

Speaker 1:
So 12 years. You’ve been an accountant, uh, you’ve been a client of mine for, for two years. You really know your craft and you are doing well in a, in a socialist country, would you, would you classify it as, as would you go as far as saying that you’re now in a socialist economy?

Speaker 5:
It’s hard to admit being in Alberta because Alberta is very conservative base. You know, people forget that Western Canada is, is very conservative. Uh, but you know, we do have a very socialistic regime at this point in time.

Speaker 1:
Okay. So you’re, you’re doing well and a socialist economy. Why? Cause you’ve, you’re, you’re a diligent doer. You’re that Canada’s highest rated and most reviewed CPA. And I’m excited for you to break down the first 10 steps to buying a business and, uh, Jason Beasley’s with us here today. And so, Jason, if you have any questions for Sperl as it begins breaking down these, uh, these first 10 steps to buying a business that you think are our clients, your clients would want to know. Oh yeah. Feel free to interject to my friend. Oh, I definitely will. Okay, here we go. Josh, what is a, what is step number one of buying a business?

Speaker 5:
Well, step number one, you want to get the seller to tell you you have price. I mean, Chris boss, you know, the FBI hostage negotiator, he’s, he’s got some great material in his book about how you can’t negotiate with itself. Uh, and it’s my experience that people who are looking to sell a business, if they can’t even formulate a clear price, they’re not really serious about doing a deal. And at this point the person is selling, they have all, they hold all the cards in terms of knowing anything about the business. Um, so any offer you make, you know, it’s not really a valid offer. It just gets you further away from the deal. Uh, and at this point, like if you can’t get a price, I would suggest just parking the negotiation following up on a later date rather than, you know, going down that time. Vortex of hypothetical discussions.

Speaker 1:
So again, you’re saying you want to start off, you, you want to get the seller to tell you a price.

Speaker 5:
Yeah, I, if they don’t have a price in mind there, they’re not even close to selling.

Speaker 1:
What kind of words would you say, because I think a lot of times you can get somebody to sell a company to you who wasn’t thinking about selling a company to you. What kind of words do you say? What kind of, what kind of foreplay do we need to say?

Speaker 5:
It’s uh, you know, kind of something like, you know, what, what would it take for, uh, you know, for, for you to sell this thing to me?

Speaker 1:
I have got audio of you attempting to buy a business. Um, and I, Jason are you if you, if you heard this audio yet? No, but I’m excited and anything this borough produces, I’m just like, I can’t wait for the next installment. So this is, this is Ron. This is uh, uh, our uh, um, um, this is Josh Spurl attempting to buy a business. And uh, I I think, I think, well this is, this is what this is him coaching. This is an example of Josh attempting to buy a business. And then Josh, after you hear the clip, you can tell us, cause I might have the wrong clip. Okay, let me queue it up real quick and just say, let me get it up

Speaker 3:
I guess,

Speaker 1:
or attending some type of pool party while attempting to buy the business. It sounds like, let me keep it up.

Speaker 3:
It’s a lot of businesses, but he’s got his eye now on the Mark. He’s found the business owner. He sees the business owner in the crowd and he’s, it looks like he’s today. It makes his way over to, he’s making his way over. Excuse me. Okay,

Speaker 1:
here we go. Now there we’ll pick now. Now this is like, I guess your, he’s knocked on the door of the business owners business and they said, sir, who are you here to see? And he says, I’m here to see the business owner. I’m, I’m wanting to talk to you about buying the business now here he goes. He’s Josh entering, entering into the building.

Speaker 2:
Hello. Hello. I’m not disturbing you, but I saw you from across the party and I don’t usually do this, but I felt compelled to tell you, son, you have an absolutely breathtaking Haney. I want to be friends with it. Certainly know how to compliment a woman. It’s a female business owner. Do you know who I am? No, I can’t say that I do. I don’t know how to put this, but I’m kind of a big deal

Speaker 1:
Josh. Is that the right language we use to approach a seller?

Speaker 5:
I’m never going to be able to buy a business to help a client buy a business again because you know all the lines.

Speaker 1:
I mean seriously cause Paul Hood, he buys CPA practices all the time. Do you pick up the phone and just cold call the business owner or how do you even have that conversation? Cause I, I the most of the business deals that I’ve seen that go down are when a buyer approaches a owner of a business to buy the business. But usually not when the business owner puts a for sale sign up there.

Speaker 5:
Yeah. I mean you can ask them. Another question that you can ask them is, you know, what’s important to you in transitioning this business after, after you’re done. Um, once you start understanding, you know, there’s other considerations other than monetary considerations. You only want to look out for certain staff members or you know, they want to make sure that someone actually buys this business, actually runs it. That’s going to help you get to where the deal as well too.

Speaker 1:
And I’ve written scripts for business owners to help them do this. But let me just tell you how it works. Okay. And the steps, I would make sure you make a list of the top of the top. Let’s say 100 businesses that you might want to buy and then you cold call Oop. And Jason, pretend that you are the front desk person for the business owner. Don’t you talk about my heinie. Here we go. And you’re going answer the phone for Smith plumbing. Okay. Oop. Thank you for calling Smith plumbing. This is Jason. How can I help you today? Hi Jason. Is the owner available? Um, he is not currently. Can I take a message? I was wanting to talk to him about potentially partnering up with them on a really big project. Got some exciting news and I wanted to see if I could talk to him.

Speaker 1:
Um, already. Uh, I can, I can try and set an appointment for him to call you back. By the way, that’s where the dreams of most people die when they try to buy a business. So you got to keep calling, you call all, call them all till they cry, buy or die. But don’t tell the front desk person I’m calling to buy the business because then they’re like, am I losing my job? And then they go tell the owner and the owner gets pissed and a deal never gets done. And then when you sit down and meet with the owner, pretend you’re the owner now. Okay. All right, Jason, man, how long have you been running the plumbing company? I’ve been running the plumbing company for about 20 years now. 20 years. And uh, you know, I’ll just cut to the chase here. I would like to buy your business and I want to ask you, have you ever thought about selling your company or what are your goals for the future?

Speaker 1:
I thought, man, I’d like to retire early, but, uh, what do you, what are you offering? And so that’s where it starts. That’s where it starts. So I just make sure we’re getting this. You’ve got to get in the room to get the deal. You’ve got it. You’re going to have to get a hundred for every one. Yes. I’ve found begin with Paul Hood and people that buy accounting practices, they will cold call. They will talk to a hundred people, 50 people, 50 business owners, 25 business owners, a hundred business owners before they set even one appointment, and then when they get that appointment, that’s where it starts. Okay, so step two, Spiro. What step number two?

Speaker 5:
Step number two is I want to get five years of CPA prepared annual financial statements. First of all, there’s a significant difference between internally prepared financial statements and CPA financial statements. Internally prepared financial statements is likely something the owner or the bookkeeper’s prepared and QuickBooks maybe even Excel, and it’s my experience with these internally prepared statements. They’re going to range somewhere between barely informative to all outlines. So what you really want our year end statements from a CPA firm and looking at those numbers and how they change from year to year, they’re going to help you identify risk factors and five years of data is going to give you a whole lot more comfort than just two years of data.

Speaker 1:
Now the word CPA, uh, stands for certified public accountant. Um, what does it stand for in Canada?

Speaker 5:
It actually comes from chartered professional accountant.

Speaker 1:
Ooh, Ooh. They add a little more sizzle up there. I thought it was Canadian patina counting to me. You thought it was one Canadian poutine accounting poutine as a, as a, I believe it’s a Canadian, made a delicacy. It’s fries with gravy and cheese curds.

Speaker 6:
You’ve been serious right now. Yeah.

Speaker 1:
Okay. I never know with you, you Jason. And he studied the culinary arts and so he knows all these things and a lot of times he’ll say stuff and I’m like, Oh man, that’s amazing.

Speaker 6:
I’m just getting with it.

Speaker 1:
I do do that a lot. But then he also throws, it’s like a, the guy that cried Wolf about culinary genius. Okay. So five years of of certified public accountant prepared annual financial statements. You’ve got to have those things because I have found that most business owners completely lie about their numbers. I mean, Josh, uh, what percentage of the time do you look at someone’s numbers when they approach you to, uh, help them with their accounting and they’re lying to themselves? Maybe subconsciously, I mean they’re talking about their profits and their growth and how many employees they have, but they’re actually not doing well at all,

Speaker 5:
whether it’s intentionally or by accident. Normally the numbers are 100% of the time they correct before they’ve had the emergency by a CPA.

Speaker 6:
What was that number again? The audio might have cut off. What was that number again?

Speaker 5:
W w 100%

Speaker 1:
is he saying 100 Jason, what’s he saying? Kind of sounds like he’s saying one like one zero 0% sign Juan, 100% that is so much, it’s so much to just listen

Speaker 6:
to marinate on that for a second. I think, I think that Josh, the highest rated CPA in all of Canada has just said Amanda’s been in business for 12 years. Who’s doubled the size of his practice here cause cause customers stick around and they’re happy with him. Just said, I think he just said

Speaker 1:
100% of the time he sits down and meets with the business owner. Their numbers are wrong. Now can I, can I throw a quick question in there for Josh about that? Yeah. So when it comes to the 100% of business owners having incorrect numbers in your experience, cause I’m sure you’ve had to go through and like help them at some point, correct those numbers. Is it because they just weren’t tracking and then didn’t know what to do so they made something up or would it be they just went with somebody that did not have their best interests at heart and was just reporting things to make the company look good?

Speaker 5:
It ranges from, they’re not doing any work at all. So the numbers are, it’s impossible to have the numbers even even close because there’s just not doing any work to track it or just, you know, not having the high level knowledge on like the almost every small business and I, I classify small as 50 employees or less is often too small to have a CPA on staff. So they’re just not going to have the high level knowledge even if they are tracking to make the correct entries. That’s why when we get to the year end, there’s always what we call adjusting journal entries. So we take the records prepared by the company and then we’re going to make the adjustments to make them correct. And like I said, a hundred percent of the time there is always adjusting journal entries, writing from completely having to be redone to, you know, making a couple changes.

Speaker 1:
I’ll tell you why. I think a lot of people are there, their numbers are off. I don’t think people enjoy doing accounting. They don’t. And I think people perceive accounting to be about as fun as going to the dentist. And so they don’t often oftentimes associate doing their accounting with afternoon delight.

Speaker 1:
What was this word? Hey, uh, just for, I want to ask you a question. I’ll ask Jason. Jason, what does afternoon afternoon delight stand for in America? What does, what does that mean when you hear the phrase afternoon delight? What are you thinking about? I could be wrong, but I’ve always been told that it means, um, Oh, what’s the, what’s the best way to say this? Coitus in the afternoon having a sexual interactions in an afternoon. Okay. We’re gonna take just a quick, quick, a quick timeout because some of the Canadians up there aren’t familiar with this song. So I’m going to cue it up.

Speaker 7:
Here we go. Let me get this up here for all this is out there. All the Canadians up there. Don’t hit it off. You bet. Yarn. This song goes out to you, Jordan.

Speaker 3:
My baby gonna hold her tied. Going to grab some afternoon tonight. My model’s always been when it’s dried, it’s right. Wow. Wait until I’m in a cold dark night. [inaudible]

Speaker 8:
[inaudible]

Speaker 3:
number one, Canada.

Speaker 8:
[inaudible]

Speaker 3:
[inaudible]

Speaker 1:
spiral back to you. Okay. So we’re talking about the, the 10 steps to buying a business. And this Justin. Okay. A lot of people don’t like doing their accounting. We get it. But you can’t just abdicate your accounting cause you don’t like it. But again, if you’re gonna buy a business, make sure they have solid numbers pro at step number three.

Speaker 5:
So step number three, you to find out how much the salary expense has been paid to the owner each year. Specifically the owner isn’t valuing a business. We’re trying to get to something called normalized income, revenues and expenses. They can stay, they could spike it temporarily, but normalize income. Roughly speaking is the expected performance next year based on historical trends and normalize income assumes all the expenses are paid at fair market value and the expenses most likely not done at fair market value of the salary paid to the owner. And you know, the problem with the financial statements, they often just, they just lump this salary with the owner in with the regular employees together. And you need to know how much of the wages were paid to the owner. And you know, in the valuation process it sounds strange, but the CPA is going to disregard how much salary was actually paid to the owner and they’re going to use a fair market salary instead. And you know, often the owners, they’re not taking a fair salary. And once you add a fair salary expense for the owner for the work the owner’s doing, you find that the business is actually not going to make any money. But it can go the other way too. It might not, it might not look like the business is making any money, but if you’re able to replace the owner who’s making 200,000 a year, once you buy the business with a manager who makes 50 all of a sudden the business is profitable.

Speaker 1:
I find that a lot of business owners, um, they, they don’t, they don’t really know where their numbers are. They don’t know where they, they don’t know versus down there. But when they want to sell a company, what they start doing, and Sperl correct me if you’ve ever, if I’m wrong, usually when they find it, they, when they find out that they have an opportunity to sell the business, they start to all of a sudden become super profitable by asking clients to pay up front and by doing shady things that they wouldn’t normally do to make it look as though this is their normal. Do you swirl to you? Do you see that? Do you see that happening?

Speaker 5:
Yes, I agree. Even the CPA prepared numbers, often the CPA prepared numbers, they’re not what we call audit and financial, right? So there’s, there’s a lower level of due diligence on them. That’s why that five years of CPA preferred financial statements is really important because you’ll start to get the trends and you’ll see that that’s awesome. The case, all of a sudden revenue spikes by 40% in the final year and you come in and what’s going on?

Speaker 1:
And I see business owners saying, you don’t need to, you don’t need to have CPA audit numbers to buy a business. I know a guy who handshaked the deal and it went well. And so for you, I have a notable quotable for you. This is a spiral. I’m sitting down with one of his clients back in the day and the client, you said, mr client, you can’t be telling me you’re going to buy a business without looking at their audited numbers. You can’t possibly be telling me. And they said, Oh no, I, this is my process. This is my proven plan. And squirrel said, none of you got it. You got to get the audited CPA, uh, the, the audited numbers for the past five years. And this is what the client said to spur. Let me queue it up real quick here.

Speaker 9:
The studies, you know, 60% of the time it works every time.

Speaker 1:
Girl, have you had people say that kind of stuff to you in the past?

Speaker 5:
Yeah, I didn’t know. I didn’t know mr burgundy with Jordan.

Speaker 1:
I don’t know who that is. I don’t know who that is. But let’s talk about the step number four. Uh, find out how many hours a week the owner’s working. Why do you want to do that?

Speaker 5:
That goes hand in hand of finding out how much the owner’s making in order to find a fair value salary to the owners efforts, ease, you know, how many hours a week that they’re working. Sometimes they’re, they’re living on the location and sometimes they’re never there, but you need to know that to assign that the fair market value for the salary.

Speaker 1:
Let me tell you why. The business coaching that I do is entirely unscalable and sellable. It’s unsellable unscalable. We have 160 clients. Jason, we explain what time I get here every day between three 30 and four why? Because that’s when you walk. Sometimes you account, but that’s when you have time to start planning your day and then also take care of action items that need to get knocked out before you start your back-to-back-to-back meetings at six. There’s not a lot of people though that you’re going to meet that have, you know, 17 books out. Nope. Who? I have three books that are working on who have a top rated podcast and you own several multimillion dollar companies. But if you approached me and said, Hey, I’d like to buy, make your life Epic, which is our one on one coaching program, he said, I want to buy that company.

Speaker 1:
I want to buy it. You, you would quickly realize you couldn’t do it. It’s like this week Google updated and requires a favor con now you know, for people’s websites. So now you’re going to see on all the agendas this week what Jason, um, the action item to have the team out of favor con to every single coaching client. And last year Google made speed updates where every single website had to go faster to rank high. What did we have to do? We did a lot of the updating or the upgrading to the GoDaddy grow 160 accounts we had to update on. Yep. So I’m just telling you, there’s not a lot of people that are interested in business at the level that I am. So it’s not scalable. And I would argue that Josh, a spiral and a certain in a certain level of what you do is not scalable either. Would you agree?

Josh Spurrell
Um, it’s, it’s not scalable in a certain way where usually the owners efforts is going to have to be replaced by multiple people. So it’s not we’re arriving at normalized income. A lot of times it’s not one salary, it’s two sours or three salaries that are gonna replicate the, the owner’s efforts. And it’s never going to be a hundred percent of what the owner put in.

Speaker 1:
So if you looked at what I pay myself and you tried to come in and replace me for that amount, good luck. I did find a guy who had a deal. Yeah. I mean, you find a guy, find a guy who, you know, bill was an entertainer for 10 years, and then find a guy who’s a business owner the entire time who could be just funny enough to get away with getting people to do what they need to do, uh, and who produces nine podcasts a week. Good. Good luck. So again, when you buy a business, don’t buy a business like mine where the owner is super involved. Now contrast that to elephant in the room and the men’s grooming lounge. How often am I am am I in each store, Jason? Um, for the occasional haircuts maybe once every other month. Yeah. Yeah. But I mean other than that, we see a Friday for the meeting.

Speaker 1:
We see a Monday for the meeting and that’s two hours. I do all my work here. We have a team that does it, but I don’t, I don’t really need to spend hours obsessing. Now as a, as a cumulative group, we have, John spends a lot of time on it. Manna spends a lot of time on it. You spend a lot of time. So we have people that do it. But if you’re going to replace the owner, I mean make sure you factor in what it would truly cost to replace them. Um, step five, Josh, when he got here,

Josh Spurrell
do you want to find out if the prices for assets or share? So there’s generally two ways to buy the business and you need to buy the assets within the business or this would include the equipment. The customer lists usually buy these assets along with taking over the lease and the lease hold improvements. The other way to buy the business is you take ownership of the corporation that actually holds those assets and also the purchaser is going to get a better tax treatment if they buy the assets and then then they’re gets a better tax treatment if they sell the corporation. However, even more important is when you buy the corporation, you end up getting all of the things that you don’t want along with the business. When you buy the corporation, if it’s getting sued, you know for something done in the past, you as a new owner now getting sued and you end up inheriting things like employee contracts and unpaid taxes, so it’s not that you should be unwilling to purchase the shares, it’s just generally you’re going to offer less, be prepared to do more due diligence and the deals can take longer to close.

Speaker 1:
I have found that a lot of times people buy a business and they think they’re only getting the good stuff with the business. They also think that just because they’ve agreed on a price Spurl that the bank is going to lend them the money needed to buy the business. So what I have found in America, and you can disagree with me, feel free. I have found that clients of mine, let’s, let’s just say that, um, I’m working with an automotive repair shop and they want to sell the company. I have found that a bank will only lend the profits of the business times three plus the depreciated value of the assets. Let me give an example. If you had a $1 million building, it’s worth a million dollars and your auto body shop made 500,000 a year of profit. Most banks will only lend you about 1.5. They’re going to say that the value of the shop and all the crap is a million dollars and the value of the profits times three is about a million and a half. The only, we’re only, we’re only going to value that thing at about two and a half million dollars. Um, Spurl would you agree with that? Is it different up in Canada? Is it different in general? Give us your feedback on that.

Josh Spurrell
Um, it is, uh, that’s a pretty reasonable projection of what banks and the maximum amount that banks alone. There are some instances that we see where banks are more aggressive in terms of like buying medical practices of certain types. Um, but yeah, I mean automotive shelf, that would be, uh, uh, in fact that would be a good result from a bank. What you’re describing,

Speaker 1:
and now I want to make sure we’re getting this about an America, I don’t know if it’s different in Canada, but the vast majority of business purchases involve a bank in America is that it’s very similar up there in Canada. It’s Brill.

Josh Spurrell
Yeah, it’s going to involve a bank or a lot of times we find it’s going to involve vendor financing. The business owner who’s selling, if they want the price that they want, they’re going to have to provide some of the financing themselves.

Speaker 1:
In America, most business transactions work like this. You break the deal into three parts. So let’s say I agree to sell my company to Josh burrow for a million dollars. Spurl will show up with a 30 $330,000 of a bank loan, $330,000 of cash and $330,000 of owner financing where he’s making payments to me. Or he might show up with 10% down. And then a third of it comes from bank financing and then the rest of it’s owner financing. But there’s all, there’s almost always some sort of owner financing. And why can owner financing be just a little bit dangerous?

Josh Spurrell
Um, well in terms of if you can’t make the payments, they can take back the business, but also on the other side, you know, if you’re that owner, are you actually going to get paid when you’re, when you’re offering the financing, right?

Speaker 1:
Spur. Like, I’ll tell you, Sherry, a dirty story, terrible story. Years ago I sold a company, I won’t mention the name of it, but the guy who bought the business, uh, was immediately as soon as I sold the company, he decided to stop doing the things that worked at, uh, out of spite or rage or whatever that was right. And I got most of the money up front, but some of it was owner financing and uh, one month he said, I can’t pay you this month, but next month I’ll get caught up. Spurl why is that a dangerous statement? Why would you freak out as a CPA if I was your client? I told you that.

Josh Spurrell
Well, I mean you just transitioned the business from who is very experienced at running the business. Someone who, for all intents and purposes is a rookie and if they couldn’t make it make not month, what makes you think they’re going to be far more experienced for the next month? It’s usually doing work at that point.

Speaker 1:
And what happened was with this particular situation, I got asked to come in and fix it, but I didn’t get to sell it again. So I ended up having to get a job at a place I just sold. And I’ve sold a lot of companies, but I had to work at a job at a company I just sold for a decent wage to just to fix it. So I get my own payments out of it. So it was like being an owner again with none of the upside. So be very careful there and I’ll chose a spiral step number six what step number six of the first 10 steps to buy a business.

Josh Spurrell
It’s exactly that place. We want to find out if the owner’s willing to offer vendor financing cause this factor will dramatically affect the price, are willing to pay. They just don’t know that there is, there’s actually a lot of businesses sold without any bank involvement or much cash put up front at all despite if that’s a good idea or not. That’s just how a lot of these things end up going down. Often the salary has been agreed to that set monthly payment for you know, a period of time and if the purchaser fails and make the payment, the seller takes back the business and the deal can sound far fetched. But you know selling a business is far less certain than selling a house. There’s a lot less people looking to buy businesses and houses. And you got to imagine if you’re 65 year old business owner, we’ve been trying to sell this business for years, retired or working 60 hours a week and someone walked in and agrees to pay you the same salary you’re making and all you gotta do is give him the keys and stop showing up. It’s an enticing deal. And then the new owner can, you know, maybe in a good case scenario, they come in and he takes the thing from 1 million to 2 million a year, which is often far easier than taking a cold start from 2 million a year. And it can be a win win for everyone. I’ll be, it has a certain amount of risk attached to it.

Speaker 1:
Now I have audio of, uh, this is a business owner. Um, we’ll call him Ron, whoever he is, and he’s talking to the new owner of the business. So Ron has worked out an agreement, uh, Jason, where he’s going to sell the company to this other lady. Okay, got it. So Ron selling his automotive repair shop to this lady and um, they’re there. This is kind of there for its owner. Finance don’t sprint. They’ve agreed she’s going to make payments to him. And I just want you to tell me maybe why it’s dangerous if you don’t get along well with the person who’s making payments to you over the next five years. Let me keep this clip here. Uh, see if we can relate to this. Here we go. This is the Bishop port Butler’s chaps to the button mitzvah but mitzvah. So apparently the, apparently the, the, the new business owner, um, is uh, saying things that maybe don’t make any sense, but he’s, he’s decided to show up at the office of the new owner. Again, it’s just so his former office, he showed up, Jason at the office of the, of the, of the old business he sold and the new owners present. And uh, he’s uh, doing some type of verbal warmup exercises I guess. So let me hit play here.

Speaker 3:
Wow.

Speaker 1:
Full of great Brook guests. Probably they’re shooting up some type of a mechanic show here as part of their ongoing marketing and they’ve decided to continue working together cause he sold the business, but he still wants to be involved on the marketing show. Let me hit player how now? Brown cow. How now Brown. Now let’s talk about this for a second. When the owner continues to want to show up their Spurl after they’ve sold a company, is that common as I see that a lot, man, that guy just sold you a company, but he wants to show up and be a nuisance. Have you ever seen that happen?

Josh Spurrell
Yeah, I’ve seen it happen. It’s rarely productive,

Speaker 1:
rarely productive, but it happens all the time, so you have to agree on that, right? Hey, just because I’m making payments to you doesn’t mean you’re going to show up every day, right?

Josh Spurrell
That’s right. Yeah. That transition strategy should be my experience. It works best when it’s clear.

Speaker 1:
There it is. There it is. Now a spur up, a move number seven. What’s a move number? A seven.

Josh Spurrell
You want to get a copy of the lease? I mean, a lot of these deals, there’s just dead in the water. As soon as the lease review, you know, for all you know, the lease is about to expire. The rent’s gonna double as soon as you take over. So just get a copy of the lease early on in the process. Avoid wasting time.

Speaker 1:
You got to get a copy of the lease early on. Now, what if the potential seller doesn’t want to give you that lease? A, what would you say?

Josh Spurrell
You’re buying an unknown. It’s like walking into a house and you know they’re not going to show you the upstairs would be the same thing.

Speaker 1:
Okay. All right. Now step number eight. What is step number eight is we’re talking about the first 10 steps to buying a business. What is step [inaudible]?

Josh Spurrell
You want to get exactly the same deals for another business in the same or a similar industry. I get people that come into my office and they’re looking at a specific business as if they’re adopting a puppy. And they got some sort of emotional attachment to this particular deal. And I asked them if they think it’d be a good idea to buy a house after looking at only one. And if you look at only one, it clouds your judgment. I mean, if you only look at one house, you’re comparing that house with homelessness. So the house always looks like a good deal, but does he compare with other houses? We can have a rational discussion. It’s the same thing with buying a business

Speaker 1:
that is sad is it’s a powerful, a powerful point. I see a lot of people that are going, I want, I want to buy a business. Uh, and I know that, uh, you know, spiral just told me I need to look at a lot before I say yes to something I need to look at. At least. I always tell you, if you’re gonna buy a business and look at least five potential businesses to buy before you buy one and sprawl, you tell them you need to do it and then they say, I don’t have time. Have you ever heard that? The force per like I don’t have time. This is the hot deal. This is the hot deal. Have you ever heard that argument?

Josh Spurrell
It’s the only one. It’s the only one on the planet. I don’t know how they arrived at that conclusion but it’s the only one.

Speaker 1:
Well I remember when if I can just hop in here real quick. Cause you know a Sparrow saying if you compare the one house, the yeah, that does look better than homelessness but the same. And then you had the same metaphor when it came to businesses. But when I first started looking for a house, you specifically said you were the only person that told me this clay was, you need to look at at least five. Yes. And then visit all of them. Yeah. Find one that’s your favorite and say, Oh I want to tour that. Find a list. And keep building that list and then see every single one. And that was huge cause I found some that were like, why would I consider this? And I also, I also was hammering you, I always tell people, if you think you want to live in the city, go actually rent an Airbnb in that condo or in that area and see if you like it for like a week.

Speaker 1:
I go, you mean I should rent a house for a week? I go, yeah, because you live in the country and you should rent a house out there in the city or a condo or something. Because a lot of times people, as soon as they actually go in the house for two or three days, they go, I would not want to live down here. I also tell people if you want to live in the city, like in Tulsa, be called Midtown, I would encourage you to go look at a house, maybe stay at a house in the country. And why would I recommend that Jace? Well, because you’re going to see the vast difference. So like if I wanted to, let’s say live the camp Clark life, I want to have a huge plot and land out, you know, not in middle of nowhere but far enough away where I can have quiet and my own space.

Speaker 1:
I might get out then realize maybe I don’t like coyotes or maybe I don’t like taking care of this massive lawn or maybe I don’t like driving 45 minutes ago. My favorite, you know, coffee shop. So everybody out there, I just encourage you, if you are going to look at buying a company, get to get, get to get those details and actually try it on a little bit. I mean people spiral. People who spend more time trying on clothes before buying them at Macy’s and they often spend buying a business. Maybe you, have you noticed that?

Josh Spurrell
Yes. That’s driving a car owner buying the clothes. Yes, absolutely.

Speaker 1:
Now Richard Branson who couldn’t be here on today’s show because he has things to do, said business opportunities are like buses. There’s always another one coming. Again, he says business opportunities are like buses and there’s always another one coming. Don’t get emotional about it. Sprawl. Do you have to get unemotional? D should you be emotional when you’re buying a business?

Josh Spurrell
You do. And it’s almost impossible when there’s only one on the table. You’re just going to have emotional attachments to it.

Speaker 1:
Oh, spiral. What’s, what’s step number nine, my friend?

Josh Spurrell
You want to do some preliminary projections for cold start in that same industry, you know, people, they always forget, you always have the option of starting a similar business from scratch. So you gotta ask yourself, you know, how much is it going to cost to build the space? How much should the new equipment costs? How much would I have to, you know, spend on advertising to get the existing customers? How much operating capital would I go through before the business becomes profitable? You should always keep the cost of starting from scratch in the back of your mind because effectively these costs, they represent the ceiling and the maximum you’re going to pay for the existing business.

Speaker 1:
You know, one of my good friends wanted to buy a liquor store recently and I told him why and he said, well, you know, this person has their business for sale. It was a liquor store that was for sale for sale for like $350,000 there and a nice area of Tulsa and they wanted to sell it for $350,000 and essentially all it is is it’s a location very near the Riverwalk here. It’s just a leased space and they have a sign that says liquor store and they have a lot of liquor in their spiral. Why would it be better to probably just start another business if the business is not super profitable, it’s a liquor store. Their only form of marketing is their location and their sign and they’re not super profitable. Why would it be better to just start a new one?

Josh Spurrell
Sometimes it’s going to be a lot of work to overcome that. You know that bad branding and there’s probably a bad team inside of that bad branding. So it’s going to be a lot of work to unwind what’s been done there

Speaker 1:
and where do you really get in for $300,000 I mean, they have one marketing strategy, which is step one to have a location, have a location. I mean, seriously, they don’t do anything. They don’t do Google reviews, they don’t do optimization, they don’t do mailers, they don’t do calls, they do nothing. And then you can just buy them, buy liquor wholesale and boom, you’re open. Just lease a space, put cool sign up there, get some liquor, bam. You’re open. That’s, that’s the move. Now the spiral. What is the next step?

Josh Spurrell
I mean, the next step is now you’re ready to, you know, meet with your CPA and come up with an offer that works for you. You know, once you’ve gone through this whole list, you’re ready to come to us and come and meet with the CPA. Oftentimes we get meetings booked where they have no idea. They don’t even know what the price is. They’ve never seen financial statements and we just have to talk in general house in generalities of what, what the actually planned here. But you know, once you have these numbers you’re ready and the CPA can walk you through the risks that they’re seeing on the financial statements as well as your tax implications. They can help you normalize that income, come up with a preliminary valuation. You know, it’s also, it’s important to remember that being patient is probably the most important thing when it comes to buying a business.

Josh Spurrell
We talked about business opportunities to like buses and other one will come along. And unlike houses businesses, they’re often sold for far less than the original asking price. They might not like your original offer, but the pool of buyers is small and the value is very subjective. It’s not uncommon for a vendor to come back a year later and accept an offer that was, you know, half the original asking price. That never happens in real estate. But it happens. A business and running a business is tough. So eventually, you know, if you’re the only offer on the table at the business owners breaking point, your chances of getting the thing are actually pretty good. No matter how far apart you are at the beginning.

Speaker 1:
I want everybody out there to consider this idea. Um, Spurl is telling you the 10 steps, but the most common excuse that people give for not being able to get stuff done. According to Lee Cockerel, you know, Lee Lee Cockerell is the former executive vice president of Walt Disney world resorts, and he said the number one excuse that people, he told me, he said, the number one excuse clay, this is the guy who managed 40,000 employees and 1 million customers per week at Disney world. The former executive vice president of Walt Disney world resorts. He told me we were sitting down working on the time management magic book together. Jason, what do you think the number one excuses that he told me, he said, this is the number one reason why people say, I don’t have time to get things done or to implement these 10 steps.

Speaker 1:
What do you think? He said? Oh, if people say they don’t have time, I was going to use the excuse. I’m busy. That’s what they say. I’m too busy. I don’t have time. I’m too busy. Sprawled the people say that. Do they say that to you or did they say it just to us? Did they say just to Lee Cochran? Was that the number one excuse you hear? I’m busy all the time now. Maybe now the only excuse I could, the only valid excuse that I would, I would, if I was sitting down, I was a CPA and I’m certainly not, but if I was, if I was sitting down Jason with a guy and I said, you too busy. And he said, I am too busy. I said, you’re too busy to go through the 10 steps here. You’re too busy to go through and, and uh, you know, one get the seller to tell you a price.

Speaker 1:
Said I’m too busy, too busy to step to get five years, five years of CPA audited financials. I said, I’m too busy. Said, you know, step three or two, you’re too busy to find out how much salary expense has been paid to the owner. Said, I’m too, I’m too busy. Step four, you’re telling me you’re so busy, you don’t have time to figure out how many hours a week the owner’s working. You’re too busy to find out the price for the assets or shares. You’re too busy to find out the owner’s willing to offer vendor financing. You’re too busy to get a copy of the lease. You’re too busy to get this same zip to get the exactly the same details for another business in the same or similar industry. You’re too busy to do some preliminary projections for a cold start in that industry. You’re too busy to meet with Canada’s top rated CPA, Josh Pearl to come up with an offer that works for you. Jason, what’s the only excuse that I would believe to be acceptable? Uh, which should be the truth is you’re not ready to buy a business. There’s only one excuse that I can exempt. What’s that? Unfortunately did not get it right. You did not get it right.

Speaker 1:
Maybe I don’t suffer that excuse. Tell me, what does that excuse? If a guy told me, listen buddy, I’m newly married and I’m too busy engaging in afternoon delight, I would say, you know what? Nothing wrong with that marital sex. And with that I’m going to cue up a song that I like to sing. Uh, cause I do believe it’s your marital duty to please the booty. Let me keep it up here. Let me queue it up here. Let me keep it up here. This is really quite simple. Here we go. It’s like wait a second. Go in to find my baby. [inaudible] my model’s always been when it’s right, it’s right. Cold dog night.

Speaker 10:
[inaudible]

Speaker 1:
Hey,

Speaker 10:
and we know the night is always going be there any way out. My app, looking forward to a little afternoon light Robin sticks and stones together makes us boxing night. And the thought of loving [inaudible]

Speaker 1:
you guys have it. See that’s the only thing that’s the only

Speaker 10:
afternoon delight.

Speaker 1:
That’s the only excuse that I can possibly, uh, Spiro. Wouldn’t you agree? If a guy says, Hey, I’m newly married, um, you know, engaging in at least four to six hours of afternoon delight per day. Wouldn’t you say that’s the only valid excuse,

Josh Spurrell
hard to argue with the excuse.

Speaker 1:
It would be difficult to argue with that excuse. On that note, if you’re out there today and you’re looking for a CPA in Canada without reservation, I would recommend you check out Josh. Burl, bro, why can’t you work with United States American clients

Josh Spurrell
other than the bookkeeping? We can do the bookkeeping, but other than you know that this tax work is very specific from country to country. So rather than be, you know, okay. As someone, I’m a specialist in Canadian tax.

Speaker 1:
Do you, do you, you guys get together up there in Canada with, with the Mounties around a campfire and sing afternoon delight up there. That’s a popular song up there.

Josh Spurrell
It is. It’s not a standard practice. Like I can’t remember doing it anytime recently.

Speaker 1:
What’s the temperature up there today?

Josh Spurrell
The temperature up here today. All clear. I got to go to my phone. I

Speaker 1:
fun my baby. Gonna grab some mapper. Zero. You’re warming up. You are warming up spiral. It’s an honor to have you on the show. We’d like to end each and every show with a boom spiral. Are you prepared to give us a Canadian boom?

Josh Spurrell
Ready to bring the boom?

Speaker 1:
Jason, are you prepared psychologically, metaphysically exoterically Oh, okay. I think you ready? Then they’re ready to go. Without any further ado, he’s ready. He’s very ready. Three, two, one, boom.