80: Looking at Your Business From the Perspective of a Manufacturing Business Broker & Ex-Business Owner
Chris Fagnant joins Nana Bonsu on this episode of Build Value By Choice to discuss making your business more sellable, specifically in the manufacturing industry. As a broker and ex-business owner in the manufacturing industry, he’s the perfect person to advise and guide you through making your business more attractive to buyers.
KEY TAKEAWAYS
- The key factors that determine the value of a manufacturing business are people, productivity, execution, and cashflow. Much like any other business, potential buyers will want to see proof of healthy and sustainable cash flow. They will also want to see that the supply chain you’re a part of works and if you control your own product lines.
- It can take at least 3 years to correctly prepare your business for sale, even from the day you buy or start the company, you should be working out your exit strategy. If you run your business in a way where it can operate without you, then you’re on the right path to preparing your business for sale.
- There are personal expenses for business owners that get wrapped up in the company books. These minor expenses should be worked out of our books because when your business is being appraised they want the true business expenses, they want to see how it will look when they run it and not have to work out what it looks like without you.
- The number one mistake business owners have when selling their business is understanding how their business is valued. Top line revenue is not the main driver and when it comes to your specific IP, 99% of the time is not the reason someone wants to buy you.
- If you’re looking at building the value of your business for the next 3 to 5 years, look at the suppliers you have, are they the right suppliers or are there better ones out there. You need to foster those relationships with regular lines of communication and even paying a day early will put you top of their list of people they like to work with.
- SDE = Seller’s Discretionary Earnings.
- EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization.
BEST MOMENTS
‘It was an opportunity to put a lifetime’s worth of experience in manufacturing to work for others’
‘The outcome of that was a 95% reduction in demand from our largest customer, so we had to pivot’
‘We leveraged relationships with the right people to ensure we had advocates for our business’
‘You don’t sell a business and get a cheque the next week’
‘Only 30% of businesses successfully transfer for the 1st generation to the next’
EPISODE RESOURCES
https://www.linkedin.com/in/christopherfagnant/
VALUABLE RESOURCES
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ABOUT THE GUEST
Chris’ role as a business broker is born out of a lifetime of experience living and working in family-owned businesses. He grew up in the heat seal lidding business. Initially, Chris pursued more corporate opportunities and spent seven years working in the restaurant industry prior to his return to the family business in manufacturing in 2010. From 2010 to 2021, as the President of Qualtek Manufacturing his focus was on leading the resurgence of advanced manufacturing.
In parallel with business management, Chris has invested in commercial real estate and managed properties associated with their businesses. With over 2 decades of hands-on experience in small and medium sized businesses, Chris helps people make sense of the market when the time comes to buy or sell. When he distills the various roles and responsibilities he’s had in his career, the one constant thread linking them all together is his ability to build relationships with people. Chris’ goal is to help people make confident decisions in a complicated environment.
PODCAST DESCRIPTION
Hosted by Nana Bonsu of Infinite Horizons, this show aims to serve small business owners who want to grow their businesses while reducing their own personal involvement. We do this through a combination of interviews with industry leaders, and host presentations. We are certified value builder advisors and leverage a statistically proven methodology to help clients such as you scale or transition their business to the next chapter.
We care for our listeners and see their dreams as our own. We aim to foster a community that embraces freedom, generosity, and integrity. This is a show by entrepreneurs and business owners for entrepreneurs and business owners.
ABOUT THE HOST
Nana Bonsu:
“I am an entrepreneur and ex-Corporate Executive who’s applying his experience and knowledge from working in various ways to pursue my passion of helping small business owners increase their choices in life by leveraging my knowledge and experience, their employees, systems and money. I help small business owners transform their business and increase value through action-oriented education and implementation of strategies and tactics to make their business sellable even if they are not planning on selling. Known for establishing an environment for personal growth and development. My multicultural background equips me with the intuitive understanding of different cultures and how they impact business owners.”
Infinite Horizons, Inc. on LinkedIn
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