# SEO Rockstars 2026: Day 1 - Joe Lau

**Video URL:** https://www.youtube.com/watch?v=HN68eAX7yHk

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## Transcript

**[00:04]** How's everyone doing? Good.

**[00:06]** >> How's this morning section? It was

**[00:08]** amazing, right? I learned so much.

**[00:10]** >> It's been a while since I was uh I'm I'm

**[00:12]** attended to like a expert kind of event.

**[00:14]** So, thank you for having me here. So, um

**[00:17]** today I'm going to tell you some I'm

**[00:18]** talk to you about something different.

**[00:20]** It's all about valuation. Let me ask you

**[00:23]** this question first. Who here is who's

**[00:26]** the first time here? I am only. Oh,

**[00:28]** there you go. Who's been here at least

**[00:30]** three times? Amazing. Five times.

**[00:34]** That's amazing. Why you guys keep coming

**[00:36]** back? Is it for the networking? Raise

**[00:38]** your hand if it's for the networking.

**[00:40]** Who use it for the knowledge?

**[00:43]** >> Who's here to try to make a lot of

**[00:44]** money?

**[00:46]** >> All right. So, that's it. No one here

**[00:47]** trying to make money on that side. All

**[00:49]** right. I hope you like to make money

**[00:51]** because this section is about making

**[00:52]** money. So what I'm about to show you

**[00:54]** today is how how do you two to four

**[00:57]** times your valuation without a single

**[00:59]** dollar without spending a single dollar

**[01:00]** on marketing. Who's excited about this?

**[01:04]** All right, let's do this. So I know your

**[01:07]** time is precious. I promise not going to

**[01:08]** waste your time. I'm going try my best

**[01:10]** to give you the best information I can

**[01:12]** compounding with 23 years experience of

**[01:15]** I have into just about 40 minutes. So

**[01:17]** but I need you to play full out. So for

**[01:20]** the one at home, if you can type in yes

**[01:22]** in the chat to play full and just give

**[01:24]** me 40 minutes, I promise it will worth

**[01:26]** your time. For the one that's here, can

**[01:27]** you give me a yes? You play full with

**[01:28]** me.

**[01:29]** >> All right. Thank you for the confidence.

**[01:31]** So in this presentation, I'm going to

**[01:33]** give you three things. The first thing

**[01:35]** is I'm going to show you what your

**[01:37]** business truly worth today and how do

**[01:38]** you actually figure it out and calculate

**[01:40]** it. The second thing I'm promise you is

**[01:43]** we're going to identify what is going to

**[01:45]** drive the value of your business so you

**[01:47]** can two to 4x your valuation when you

**[01:49]** decide to exit. And the last thing is

**[01:52]** we're going to figure out an actionable

**[01:54]** score for you so you can figure out what

**[01:56]** you need to do to implement to get the

**[01:58]** needle mover to get that valuation that

**[02:00]** you dream of.

**[02:02]** So real quick here there's no tracking.

**[02:05]** I don't even know how to do that. Uh I

**[02:07]** just want to take a have you guys take a

**[02:09]** quick poll here so I can kind of get a

**[02:11]** gauge on where are we in terms of sizes

**[02:14]** of your business and um you don't even

**[02:17]** have there's no optin for that email I

**[02:19]** just want to see where you are at two

**[02:22]** question what is your uh any revenue

**[02:24]** range and the second question is uh if

**[02:26]** there's an exit timeline that you

**[02:28]** thought about and I'll have a live poll

**[02:30]** right here and share with you in a

**[02:32]** second

**[02:34]** just two question to All

**[02:38]** right, let's see here. I got eight

**[02:41]** responses.

**[02:45]** Let me know when you're done too so I

**[02:47]** can check the result.

**[02:52]** All right, looks like most of you done.

**[02:56]** Okay, so looks like about might even

**[02:59]** need my glasses.

**[03:01]** Okay. About 47% of you do a little bit

**[03:04]** less than a million a year. About 27% of

**[03:08]** you do about1 to3 million in revenue.

**[03:11]** 16% do three or seven. Great job. And

**[03:15]** about 5% do about 7 million. So amazing.

**[03:18]** Amazing. And then about uh let's see

**[03:22]** here 10% want to within exit within 12

**[03:25]** months. 10% want to exit within 12 to 24

**[03:30]** and 15% exit in about two two to three

**[03:33]** years time frame and then wow 63% have

**[03:37]** no idea

**[03:39]** I love it this is a good crowd all right

**[03:42]** so personally I have found multiple

**[03:45]** companies failed many many times lost

**[03:48]** millions of dollars and luckily I was

**[03:50]** able to exit three of the company

**[03:52]** starting from scratch all the way scale

**[03:54]** to exit and here are the lessons that I

**[03:56]** personally have learned. Now, the very

**[03:59]** first time I exit, let's talk about the

**[04:01]** cool stuff first, right? To kind of show

**[04:03]** you what it's look like when you exit uh

**[04:05]** successfully. The very first time I

**[04:07]** exit, the first thing I did is I bought

**[04:09]** my uh uh wife a ring to engage. I bought

**[04:12]** myself two cars and a house. All right?

**[04:14]** So, that was in my 20s. And then the

**[04:16]** lessons I learned from that particular

**[04:18]** exit is seller finance structure. When

**[04:21]** you sell your business, most of the time

**[04:23]** depend on the price. If you sell more

**[04:25]** than a million, there's a big chance the

**[04:27]** buyer is going to ask for sell finance,

**[04:29]** meaning that you're playing bank. They

**[04:31]** want to, you know, like retain some

**[04:33]** percentage and then you only get it

**[04:34]** after a certain amount of time. So

**[04:36]** that's what happened. The lessons I

**[04:37]** learned is I did have a lawyer and

**[04:40]** accountant in that time, but I did not

**[04:42]** structure the deal properly. So when

**[04:45]** they default on not paying me, I lost

**[04:49]** hundreds of thousands of dollars. And

**[04:51]** not only that, I was stupid enough

**[04:53]** because I didn't know it was my first

**[04:54]** exit. I did not know to put in a clause

**[04:56]** to claim some assets back or personal

**[04:59]** guarantee like get the business back or

**[05:01]** takes his house. So he just walked away

**[05:04]** and still operating the business and

**[05:05]** just not pay me. So that's my first

**[05:08]** lessons and the lawyer would not tell

**[05:10]** you that and accountant will not tell

**[05:11]** you that. This is just personal

**[05:12]** experience. It happen all the time in

**[05:14]** seller finance. So that's my first

**[05:16]** lesson.

**[05:17]** >> Wait, why wouldn't it?

**[05:19]** >> Say what? because it's is in the

**[05:22]** contract when you the way without going

**[05:23]** into too much detail when you sell a

**[05:26]** business with seller finance basically

**[05:28]** what they give you is a personal note

**[05:30]** and in that notes whatever terms they

**[05:32]** put in that's what it is so in that

**[05:34]** terms I did not put in personal

**[05:36]** guarantee I did not put in what happened

**[05:39]** if you default right I put in the closet

**[05:41]** if you default I charge you 10% right

**[05:44]** that was it but then they can not pay

**[05:47]** and then you just wait and wait and wait

**[05:49]** and just to give you a tip. If someone

**[05:51]** not pay you any money, if they threaten

**[05:52]** to go bankruptcy, this pretty much done,

**[05:55]** right? Because the house, the bank, they

**[05:57]** might have a house, they have a

**[05:58]** mortgage, those are the first lean,

**[06:00]** right? So for personal note, usually you

**[06:03]** got nothing. You're the last in line,

**[06:05]** right? So that's the first sentence I

**[06:06]** learned. That cost me hundreds and

**[06:08]** hundreds of thousands. All right? And

**[06:10]** there and a cool story to tell. So this

**[06:13]** is my first exit, first lessons. Don't

**[06:15]** do that. So the second lessons I learned

**[06:18]** well on the second exit what it got me

**[06:20]** is it gave me the choice to really focus

**[06:22]** on a business that I was so passionate

**[06:24]** about at the time are multiple things

**[06:26]** going on right so my second exit allow

**[06:28]** my allow me the freedom to just hone in

**[06:30]** on one thing that I'm really passionate

**[06:32]** about which focus it really is the key

**[06:34]** to grow anything substantial and the

**[06:36]** lessons I learned from that business on

**[06:38]** exit is I ran the business for about 10

**[06:41]** years make lots of money great but

**[06:44]** toward the year eight and nine I started

**[06:47]** to get burnout because it wasn't

**[06:49]** exciting anymore right it's kind of like

**[06:51]** everything is great system is in place

**[06:53]** automated so I saw it at a flatline not

**[06:56]** dipping just flatline and before that

**[06:59]** since the first year I have almost

**[07:00]** double digit and triple digit growth

**[07:02]** year to year so it's become compounding

**[07:05]** pretty big but just because the last two

**[07:07]** years was flatline I got major discount

**[07:10]** by the by the buyer and and result I

**[07:14]** lost two multiple. Now, because of NDA,

**[07:17]** I can tell you exactly what was it, but

**[07:19]** let me just give you the math. If I was

**[07:22]** selling at a multiple, whatever that is,

**[07:26]** and my earning was a million dollar a

**[07:27]** year, that cost me 2 million just

**[07:30]** because I was selling flatline. If I

**[07:33]** would sell it on an uptrend, like let's

**[07:35]** say two years earlier, or continue

**[07:37]** maintain a little bit uptrend, I would

**[07:38]** make at least 2 million more with that

**[07:41]** hypothetically speaking. So, that's the

**[07:43]** lessons. Do not sell a flatline. Don't

**[07:45]** do that. So, last lessons I learned um

**[07:49]** from my last exit is um

**[07:53]** it's pretty cool. So, I was able to

**[07:55]** retire my wife fully and then I was able

**[07:58]** to move to for Miami and then put my

**[08:00]** kids private school, not work for many

**[08:03]** years and just truly find a passion

**[08:06]** project and I become investor and that's

**[08:08]** what I love to do and helping company to

**[08:10]** exit. So allow me that lifestyle choice

**[08:12]** and but that's also a lesson to learn.

**[08:14]** You would think like after exit two

**[08:16]** times, right? You got to be good at it.

**[08:18]** No,

**[08:20]** I mean I don't know why I didn't learn.

**[08:22]** Just so much going on. So what happened

**[08:24]** on the last exit is

**[08:31]** I did not sell on the flat line. I sell

**[08:32]** an uptrend, right? I structured it

**[08:34]** really well and this time was a cash buy

**[08:36]** and what it was what I left on the table

**[08:38]** was a little bit on the timing at that

**[08:41]** time the industry was getting hot and I

**[08:45]** made a personal choice that okay my

**[08:46]** business was designed to exit but I

**[08:48]** didn't ex I didn't exit in the best

**[08:51]** timing could be chances chances are you

**[08:53]** cannot time the timing but I did not

**[08:55]** exit because the business was ready I

**[08:57]** exit because I was ready I I was done

**[09:00]** you know for personal reason I was done

**[09:02]** so that left three eggs on the table.

**[09:05]** Remember that three eggs times the

**[09:07]** earning. So again, if that business was

**[09:09]** doing $2 million now, the six

**[09:12]** >> threex more.

**[09:13]** >> Yeah. Well, three three times more. So

**[09:15]** three three eggs more.

**[09:16]** >> Yep. Going on up trend. I mean many many

**[09:19]** reason for that but that was how much it

**[09:21]** cost me. So as you can see these lessons

**[09:24]** here is costly. It's very expensive.

**[09:27]** >> Wait that didn't cost you make more.

**[09:30]** >> I did not. I could have make more but I

**[09:32]** sell it right before

**[09:35]** I sell it when I was ready not when the

**[09:38]** business fully ready. All right. So

**[09:40]** that's what happened. So as you can see

**[09:42]** it if you have a chance to exit these

**[09:44]** are lessons just right off the bat. And

**[09:46]** there are many more I'm sure I'm going

**[09:47]** to make again mistake exit number four

**[09:49]** and five and six. It's just so much

**[09:51]** going on exit that your lawyer will not

**[09:54]** tell you. They might not even know. Your

**[09:56]** content would not know. Like it's just

**[09:58]** one of those things that you have to

**[10:01]** look out for this kind of thing for

**[10:02]** yourself.

**[10:04]** So when is the right time to sell? All

**[10:07]** right. The right time to the wrong time

**[10:09]** to sell for sure is when the owner is

**[10:11]** ready, which is kind of like my last

**[10:13]** couple exit, right? When you are

**[10:16]** yourself is ready to sell, chances are

**[10:18]** you're either tired, done, or burn out.

**[10:21]** Have anyone of you felt that way before

**[10:23]** when you run a business? Bad time to

**[10:25]** sell. Don't do that. talk to someone.

**[10:27]** Like seriously, you need a therapist,

**[10:29]** right? This is the worst time to sell

**[10:30]** because when you do that, what happen is

**[10:33]** the buyer will see it. They'll

**[10:35]** understand. They look at the number. You

**[10:36]** cannot lie about it. You get low

**[10:38]** valuation. And not only that, it will be

**[10:40]** a heavy earnout. What heavy earnout

**[10:42]** meaning that they they're going to

**[10:44]** structure it to a way that they're going

**[10:46]** to protect themsel. So you're going to

**[10:47]** get a little money up front and you have

**[10:49]** so much on earnout. Meaning that oh, if

**[10:51]** your business is doing let's say a

**[10:52]** million, they're like, okay, I need

**[10:54]** proof for two years in a row. someone

**[10:56]** pay you the last x amount of percentage

**[10:58]** why when the business truly do that. So

**[11:01]** that's what earn mean and you also have

**[11:04]** limited buying interest meaning no

**[11:05]** bidding war. Who here have sold a house

**[11:07]** before

**[11:09]** is the best time to sell a house when

**[11:12]** the market is hot. When's the best how

**[11:13]** do you get the best price? We have

**[11:15]** multiple bidder right business exactly

**[11:17]** the same thing. So if you sell it

**[11:19]** because you are ready not because the

**[11:21]** business ready no good. So obviously

**[11:26]** when you want to sell is when the

**[11:27]** business is ready. What does it mean

**[11:29]** ready? This could take like months to

**[11:31]** talk about it. But I only have 40

**[11:32]** minutes so I'm going to be quick.

**[11:33]** Ideally is in a growing trend like

**[11:35]** uptrend right and you have a very clean

**[11:38]** uh financial is auditable like audible

**[11:41]** ready literally right the three level of

**[11:44]** your bookkeeping is the first you have a

**[11:46]** bookkeeping. So you have some kind of

**[11:48]** organization of your finances. The

**[11:50]** second level is you have a CPA that you

**[11:52]** know put a stem on it. I I verified this

**[11:54]** is good. The last level is audit. So you

**[11:56]** hear a lot of IPA like you know you hear

**[11:57]** a lot of like public trade company they

**[11:59]** audit it. That's what it is. That's the

**[12:01]** highest level. But when your company is

**[12:03]** being audited here's a little secret.

**[12:06]** When your company is being audit and

**[12:08]** your book can prove it you're no longer

**[12:10]** selling on trilling 12 months. You're

**[12:13]** selling a forward 12 months. So if you

**[12:16]** can prove yourself that let's say for

**[12:17]** example let's say you run a really good

**[12:20]** business for the past three years you

**[12:21]** have your book being audited by some

**[12:23]** accountant firm right they put a stamp

**[12:25]** on it and you can prove that I can

**[12:27]** predict my business grow every year by

**[12:29]** 20%. So when you the year that you sell

**[12:32]** it, usually for most businesses they

**[12:34]** look at the last 12 months how much you

**[12:35]** make. But if you can prove that other

**[12:38]** and the predictability of the growth

**[12:40]** instead of selling at the last 12 months

**[12:42]** you sell 20% more because now oh this

**[12:45]** business is so good your prediction is

**[12:47]** accurate. So do the math. If you have a

**[12:51]** you have if you have a business doing a

**[12:53]** million dollar net profit a year, you

**[12:55]** sell it at four multiple, right?

**[12:58]** Normally is $4 million. But if you have

**[13:01]** the track record of predicting 20%

**[13:02]** growth, now all of a sudden you're

**[13:05]** selling you're selling under $1.2

**[13:07]** million times four. Now you're selling

**[13:09]** almost $5 million. You just make a

**[13:11]** million dollar extra doing absolutely

**[13:13]** nothing but prepare for the exit and pay

**[13:16]** for the audit.

**[13:18]** Who would like to do that? spend five to

**[13:19]** 10 grand a year to order and make a

**[13:21]** million dollar more.

**[13:23]** We all love that. So therefore, you get

**[13:26]** premium prices and you have multiple

**[13:29]** bidder, right? Some industry is super

**[13:31]** hot. Like you'd be amazed how crazy it

**[13:34]** is. So Brian and I have some adventure

**[13:35]** together. We're getting into the mass

**[13:37]** spa space. Mass spa right now is selling

**[13:39]** at eight multiple eight.

**[13:45]** Isn't it insane? So they are is selling

**[13:48]** is no joke the money is absolutely there

**[13:52]** and depend on what industry you are and

**[13:54]** agency as well. So we'll talk about how

**[13:56]** to get you to that four to you know two

**[13:58]** to 4x extra.

**[14:04]** So don't sell when you're ready sell

**[14:06]** when your business is ready. So let's

**[14:08]** talk about how valuation actually work.

**[14:11]** It's actually a very simple thing. All

**[14:12]** is a private equity. All is a money guy

**[14:14]** trying to scare you. It's actually very

**[14:16]** simple math. Your valuation is equal to

**[14:18]** your earnings which is a fancy word for

**[14:20]** net profit times the multiple. So

**[14:25]** earnings and multiples is there's so

**[14:28]** many thing is going to affect those two

**[14:29]** factor right some are controllable some

**[14:32]** are not controllable. Today we're only

**[14:34]** going to talk about the thing that you

**[14:35]** can actually control. I'mma I'm gonna

**[14:37]** briefly mention what you can control and

**[14:40]** what you cannot control so you don't

**[14:41]** waste your time and Julian want to think

**[14:42]** that damn why do I not have that and the

**[14:44]** other guy have it because I personally

**[14:46]** knew someone that were chasing multiple

**[14:48]** it cost him a divorce because it took

**[14:51]** three years at the end he make $15

**[14:54]** million more but then the whole family

**[14:56]** like like gone it's it's a roller

**[14:58]** coaster when you start a business so

**[15:00]** let's talk about what can you control so

**[15:05]** again I only have about 40 minutes.

**[15:06]** These are the thing you can do to affect

**[15:11]** on the earnings and the multiples.

**[15:14]** There's about 11 things you can do to

**[15:16]** change earnings which which mean

**[15:18]** increase your profit margin. We're all

**[15:19]** business owner here. You know there's a

**[15:21]** lot you can do. This will be actually

**[15:23]** sums up to this 11 category. The other

**[15:26]** 15 is on the multiple side. As you can

**[15:28]** see at the multiple side has a lot more

**[15:30]** thing can do and usually on the multiple

**[15:32]** side a lot of them is not so much of

**[15:35]** work it's planning the right way.

**[15:40]** So take a shot of that and then we're

**[15:41]** going to talk about what really going to

**[15:43]** give you the biggest needle mover

**[15:45]** without spending a lot of money.

**[15:52]** So who here know the term SD? There you

**[15:55]** go. Right? Mike should know Mike, right?

**[15:57]** We talked about it the other day. So SD

**[15:59]** is stand for seller discretion earning.

**[16:02]** There's only two analogy when it comes

**[16:04]** to like selling. Seller discretion

**[16:06]** earning meaning that you still operating

**[16:09]** the business. The business still need

**[16:10]** you. You're the boss. You're the man,

**[16:12]** right? Everybody look up to you.

**[16:13]** Everybody come to you ask for

**[16:15]** information. You are the expert. And

**[16:17]** this is what multiple you're going to

**[16:18]** get. If you are running a business that

**[16:21]** you are the one the decision maker and

**[16:25]** everything rely on you you will sell in

**[16:28]** about two to 3x on the multiple

**[16:32]** then there's another level it's called

**[16:34]** IBIDA

**[16:36]** earning before interest tax depreciation

**[16:39]** and mortization those are the prof what

**[16:41]** that mean is you your business is

**[16:43]** professionally managed when your

**[16:46]** business is professionally managed it

**[16:47]** could be the exact same business. The

**[16:49]** only difference is are you the key man

**[16:51]** or is the business professionally

**[16:53]** managed? If your business is

**[16:55]** professionally managed for the exact

**[16:56]** same business, you can sell anywhere

**[16:58]** between four to eight multiple.

**[17:02]** So again, if your bottom line is a

**[17:04]** million dollar, if your SD exit is about

**[17:09]** two to three million, if you turn it to

**[17:12]** professional management, you can sell

**[17:14]** for about four to eight. Now my mentor

**[17:17]** always said to me extra million every

**[17:19]** million helps right?

**[17:22]** So here's a real life example.

**[17:25]** If you run uh ASIS agency with SDA,

**[17:28]** let's say your earnings half a million

**[17:30]** dollar two to three multiple you sell

**[17:31]** between one to 1.5 million that's

**[17:34]** awesome you know it's still awesome it's

**[17:35]** great but if you spend let's just say

**[17:39]** it's not free right we all know you hire

**[17:41]** people there's expense I call investment

**[17:43]** turn it to professional management you

**[17:45]** have a professional manager managing for

**[17:47]** you let's say cost you a third of what

**[17:49]** you usually make look at the multiple

**[17:51]** with $350,000 exact same business you

**[17:54]** pay 150k Okay, for professionally

**[17:56]** managed, right? You sell for 4 to 6x,

**[17:59]** you end up selling for 1.4 to $2.1

**[18:02]** million.

**[18:07]** That's extra 400 to1 $1.1 million. Is it

**[18:11]** worth your is it worth it? You spend

**[18:12]** 150k to make either 400k or $1.1

**[18:15]** million. Is it is who who's happy with

**[18:17]** this return if it's investment?

**[18:20]** That's the power on turning the to. And

**[18:23]** that's what we're here to talk about

**[18:24]** today. That's the biggest needle mover

**[18:26]** without changing anything about your

**[18:28]** business in terms of like what who you

**[18:30]** serve, how much you charge, right? You

**[18:32]** literally just have to have someone

**[18:34]** professional manager for you. So buyer

**[18:37]** if you understand what is behind a

**[18:40]** buyer's mind and I learned it from the

**[18:41]** hot lessons, right? I sold three

**[18:43]** business owned

**[18:46]** more than hundreds or hundreds of

**[18:47]** businesses as an investor. This is what

**[18:49]** two things is only really care when it

**[18:51]** comes down to is ROI. They only care if

**[18:56]** I buy this thing, how much money would I

**[18:59]** make? That's it, right? And the next

**[19:02]** thing they wouldn't care is the risk.

**[19:06]** How likely is this not work based on the

**[19:08]** number you show me? And this is very

**[19:10]** important. They look at not work. They

**[19:13]** assume the worst. They don't they will

**[19:15]** never assume, oh, what if it's working?

**[19:17]** That's not how investor or buyer thinks.

**[19:20]** They think what if it's not working. You

**[19:22]** heard the term risk management, right?

**[19:24]** If you talk to private equity firm, they

**[19:25]** literally have a department. People make

**[19:27]** millions just to do risk management,

**[19:30]** right? And this is the guy you go up

**[19:31]** against when you sell your business.

**[19:33]** They want to make sure that what are the

**[19:35]** risk? Can you minimize it? So the key

**[19:39]** for our job is two thing. We want to

**[19:41]** make sure the ROI is clean and clear so

**[19:44]** they can understand it and we want to

**[19:46]** minimize the risk so they can feel good

**[19:47]** about it. Right?

**[19:50]** So there are four things you can do

**[19:52]** right away to make sure that happen. The

**[19:54]** first thing is earnings quality. What's

**[19:57]** earnings quality? Meaning that how clean

**[20:00]** your book is. Who here want because of

**[20:03]** tax purposes you want to save some money

**[20:04]** on tax that you put your vacation on

**[20:06]** your book. You put your lease of the car

**[20:09]** on the book. Maybe sometimes your meal

**[20:11]** on the book sometimes whatever whatever

**[20:14]** you want to put on the boat that you

**[20:15]** know you shouldn't right but I do the

**[20:17]** same thing all the time for the longest

**[20:19]** time and that is not clean earning you

**[20:22]** actually hurting yourself down the aisle

**[20:24]** because let's say for example u you know

**[20:26]** how like you saw a lot of Tik Tok video

**[20:27]** they say oh you buy a $6,000 pound I

**[20:30]** mean 6,000 pound car like the G Wagon

**[20:32]** you can write off the tax I don't know

**[20:34]** the extra payment maybe it's two grand a

**[20:36]** month so a year you what you write off

**[20:38]** $24,000 That $24 that $24,000 that you

**[20:42]** save because of tax purposes. If you

**[20:45]** exit, that's four times. It's worth 100

**[20:46]** grand. So do the math. Is it worth it? I

**[20:50]** don't know. So earning quality is about

**[20:53]** clean. Everything has a reason for the

**[20:56]** business, not for you. That's what

**[20:58]** earning quality mean. Second thing is

**[21:00]** only dependency. Only dependency like

**[21:02]** like you said, if you walked away for 30

**[21:05]** days, is the business still going to run

**[21:06]** or is it going to collapse? Is it going

**[21:08]** to grow or is it going to stay flat?

**[21:10]** That's what owner dependency is and you

**[21:13]** don't want to have that. And the third

**[21:14]** thing is revenue quality. Revenue

**[21:16]** revenue quality is just what a fancy

**[21:18]** words about predictability. How

**[21:21]** predictable your earning is. Is it

**[21:24]** oneoff project majority of the income or

**[21:27]** is it recurring? Right? Can the buyer

**[21:29]** buy it and figure out oh in the next

**[21:31]** three years I can predict this income is

**[21:33]** going to come and why is that? So your

**[21:36]** your risk is uh have a profile on that.

**[21:39]** We're going to go deep on the revenue

**[21:41]** quad and how do we fix that. The last

**[21:43]** but not least is system and data system

**[21:46]** kind of like what we talked about like

**[21:47]** Dan so brilliantly have the whole AI

**[21:49]** system to automatically done like retail

**[21:52]** arbitrage that system in place right

**[21:54]** with AI with all the software is really

**[21:56]** easy to create system to train your

**[21:58]** staff to sure make sure that everything

**[22:00]** is off your head on paper. So when the

**[22:03]** buyer buy it, they know that okay, I

**[22:04]** don't need you anymore. The system is in

**[22:06]** place. And data really just mean that

**[22:09]** how clean is all the contract in place.

**[22:11]** You know, you have client, you have

**[22:12]** vendor, you may be white labeling

**[22:13]** somebody, right? So how clean your

**[22:15]** contract is? Are they all documented

**[22:17]** clearly transferable to the new buyer?

**[22:20]** That's what they mean on system and

**[22:21]** data.

**[22:23]** So we're going to talk about earning

**[22:25]** right now.

**[22:27]** So earning the mistake for earning we

**[22:29]** kind of briefly mentioned is the tax

**[22:31]** optimizer right if you are the owner

**[22:34]** you're the most important person in the

**[22:35]** world you most likely optimize earning

**[22:38]** based on tax saving right and that's a

**[22:42]** mistake and the quick win mean for that

**[22:44]** is you want to quickly figure out like

**[22:46]** remove those things and not only that

**[22:49]** you want to pay yourself a salary that

**[22:51]** is not you know how like okay I done it

**[22:53]** before for years my accountant asked me

**[22:55]** like oh how much you want to pay

**[22:56]** yourself. I'm like, what are my options?

**[22:58]** They're like, well, if you pay yourself

**[23:00]** a lot of money, you got to pay a lot of

**[23:02]** social security tax. But if you pay

**[23:04]** yourself minimum, you can take the

**[23:05]** distribution, you pay lower tax, right?

**[23:08]** So, that's what I mean. But the buyer

**[23:10]** want to see is like, no, how much is you

**[23:13]** really going to pay the market rate,

**[23:14]** right? When you go to Indeed, how much

**[23:16]** is it cost going to hire a campaign

**[23:18]** manager? Right? That's what they want to

**[23:19]** care. That's the market rate I'm talking

**[23:21]** about. So when you do that the buyer the

**[23:24]** buyer say okay now the book you're

**[23:26]** earning is truly representing the

**[23:29]** business not what you want to save right

**[23:32]** they don't care about your tax saving

**[23:33]** they care about how much they going to

**[23:35]** make so that's the tip about earning

**[23:38]** quality

**[23:40]** second thing is about owner dependency

**[23:43]** so I love to go camping with my kids so

**[23:45]** I call this the tax right so if you gone

**[23:49]** away for 30 days what breaks Let's be

**[23:51]** honest, something is going to break,

**[23:53]** right? What is going to break? Three

**[23:55]** things you want to look out for. New

**[23:57]** sales. When the new client comes in, are

**[23:59]** you the one that closed the deal? Let's

**[24:01]** be honest here. Who? Raise your hand.

**[24:02]** Who who closed the new client deal here?

**[24:05]** There you go. That's the first thing you

**[24:07]** want to look into. Second thing,

**[24:09]** strategy. Okay. When when Google have a

**[24:12]** new update, right? Well, like Ted was

**[24:14]** talking about, right? When Google have a

**[24:15]** new update, who made the decision to

**[24:18]** pivot and figure out what to change?

**[24:20]** Raise your hand if you're the one that

**[24:22]** making the decision.

**[24:24]** There you go. This one you look out for.

**[24:26]** The last thing is the relationship. Who

**[24:29]** here served the the big client with a

**[24:31]** monthly meeting, weekly meeting? Is your

**[24:33]** staff doing it or are you doing it?

**[24:35]** Who's doing it here right now yourself?

**[24:38]** There you go. So these are the thing

**[24:40]** that shows you that you have a owner

**[24:42]** dependency risk and the buyer don't like

**[24:44]** that. So what you want to do to fix that

**[24:47]** is same thing as the earning. You put a

**[24:50]** market rate uh manager on the book to

**[24:53]** make sure that that person can handle at

**[24:55]** least 80% of what you're doing. You can

**[24:57]** still make decision you know to de-risk

**[24:59]** a little bit as much as possible but you

**[25:01]** definitely want to have that layer and

**[25:03]** then same that the person need to be

**[25:05]** going on do most of the day-to-day

**[25:07]** communication so that when the buyer

**[25:09]** look at you they're like okay if I look

**[25:11]** at your calendar you're not like 247

**[25:13]** running this thing

**[25:15]** the last thing we want to do is document

**[25:17]** your process and also decision making

**[25:20]** now so we all here have SOP right a lot

**[25:22]** of you you know great SEO have a lot of

**[25:24]** technician you documented your process

**[25:26]** what When was the last time you document

**[25:28]** how you make decision,

**[25:33]** >> right? I I've never done that for the

**[25:35]** first 10 years of my life. I when I

**[25:37]** first heard my mentors, I'm like, what?

**[25:38]** You need to document how you make

**[25:40]** decision. How do you do that? But funny

**[25:42]** thing is documenting how you make

**[25:43]** decision is a lot easier than you think.

**[25:46]** Trust me, next time when you make a

**[25:48]** decision, just say out loud and record

**[25:50]** it and have AI analyze it. You'll see

**[25:52]** the pattern. like you do it 10 times you

**[25:54]** find out oh that's how Brian make

**[25:56]** decision that's how I might make

**[25:57]** decision and therefore you can train

**[25:59]** your staff this is how I make decision

**[26:03]** the next you want to talk about is

**[26:04]** revenue quality now the key factor about

**[26:07]** revenue quality is you want more on the

**[26:10]** retainer versus project this feels like

**[26:13]** a no-brainer but sometime it's a lot

**[26:15]** harder than execute than you think but

**[26:16]** it's actually a lot easier to ask than

**[26:18]** you think sometime you just have to ask

**[26:20]** right I know a lot of people that you

**[26:22]** know one great agency to see don't who

**[26:24]** who here has that retainer with client

**[26:26]** versus oneup project. Is it hard to do?

**[26:29]** You just have to do more of those.

**[26:33]** And second thing is client

**[26:34]** diversification. You don't want to have

**[26:36]** any single client that is claiming 15 to

**[26:39]** 20% of your revenue because if they're

**[26:43]** gone or suddenly like of the business no

**[26:45]** good or the sudden want to take over

**[26:47]** they you want to shut down the business

**[26:48]** 20% of your revenue is gone. So, who

**[26:51]** here have a client like that? A big

**[26:52]** client. There you go.

**[26:54]** >> I got a big issue.

**[26:55]** >> There you go. There you go. So, these

**[26:58]** are real. These are real. And the last

**[27:00]** thing is the term and stickiness. Now,

**[27:03]** while now that you have some uh like a

**[27:07]** retainer client or maybe in contract,

**[27:09]** not just on project base. What you want

**[27:10]** to do is see if you can increase the

**[27:12]** length of it. Even though if you have to

**[27:14]** give them a little sweetener like for a

**[27:16]** little freebie on it, you know, give

**[27:18]** them a little bit discount because when

**[27:20]** you plan to sell, that looks good on

**[27:23]** paper and that increase your multiple.

**[27:25]** Remember, selling is a long game, right?

**[27:28]** If you tell me, Joe, I want to sell in

**[27:30]** three months and you come to me, the

**[27:31]** only thing I can tell you is like, good

**[27:34]** luck. It is a process. Usually a good

**[27:37]** time to plan an exit is about about 24

**[27:41]** to 36 months. then you can really do a

**[27:43]** whole bunch of thing as I show in a few

**[27:45]** slide but there's 26 things you can do

**[27:48]** to increase the valuation and if this is

**[27:50]** the only business and after that you

**[27:52]** just like sail to the sunset move to the

**[27:54]** beach this is your last big act right so

**[27:56]** take advantage on that don't go to waste

**[28:00]** so the quick win is talk to your next

**[28:02]** big three take talk to your uh big three

**[28:04]** client and ask them either for from

**[28:07]** project base to retainer if you're

**[28:09]** already on retainer see if you can work

**[28:10]** out a deal that instead of 12 months do

**[28:12]** 24 months just ask right if they say no

**[28:16]** then the perfect thing I love to say

**[28:19]** sometime is what can I do to make it a

**[28:22]** yes you'd be amazed they would tell you

**[28:27]** all right last but not least the fourth

**[28:29]** level system and data now when it come

**[28:32]** to system and data how many of you like

**[28:35]** document everything that you do on paper

**[28:37]** or have a system in place or is this

**[28:39]** still is it still in your

**[28:42]** There you go.

**[28:43]** >> All right. You got to document it, man.

**[28:44]** You got to document it. So, the quick

**[28:48]** way to do is just start with the one

**[28:50]** pager. Look at your calendar on the next

**[28:53]** 14 days. Look at what you actually spend

**[28:55]** time doing on and just pick one small

**[28:57]** area and just start documenting that one

**[28:59]** test at a time. Right? Again, this is a

**[29:01]** process. If you if you're a jack of all

**[29:03]** tra for a long time and you're running

**[29:05]** mostly everything and just you know have

**[29:07]** a few contractor this process might take

**[29:09]** longer but once you're done you're done.

**[29:11]** And the beautiful thing is when you're

**[29:13]** done with this process you'll find that

**[29:15]** the quality of your work increase as

**[29:17]** well. The output is much better and you

**[29:20]** will absolutely find way to trim down

**[29:22]** the steps so you'll be more effective.

**[29:24]** Just give it a try.

**[29:26]** And also tip number two is every week

**[29:29]** you want to look at these five things on

**[29:32]** a metrics that you can actually follow,

**[29:34]** right? How you run the agency like your

**[29:37]** uh MLR, right? And then your your net

**[29:39]** profit, your new client coming in and so

**[29:42]** forth and your turn rate. These are the

**[29:44]** things that what you should be looking

**[29:46]** at on a weekly or monthly basis.

**[29:49]** Now what I want to do right now, what I

**[29:51]** say before this is a very interactive

**[29:54]** opportunity. So we can do a quick um

**[29:57]** survey kind of self assessment so you

**[29:59]** can see where you're at right now. Are

**[30:01]** you all ready?

**[30:02]** >> All right. So I'll we will be four

**[30:06]** question one question per each area and

**[30:08]** then you just have to rate yourself from

**[30:10]** zero to three. Zero is is not true the

**[30:14]** statement and then uh three is

**[30:16]** absolutely true 100% true all time. So

**[30:19]** ready to go everybody someone you can

**[30:21]** take on not looks on that.

**[30:24]** So the first question is about earnings.

**[30:27]** How confident are you from 0 to three

**[30:30]** that your financial is clean? You

**[30:33]** separate from your se personal spending.

**[30:35]** You clearly profitable and that you show

**[30:39]** a healthy three years uptrend and that

**[30:42]** when a buyer look at it they can

**[30:44]** understand within 24 hours not 24

**[30:47]** months. So just rate yourself from zero

**[30:48]** to three and let me know when you're

**[30:50]** done with this question.

**[30:55]** Are we all good?

**[30:56]** >> All right. So, question number two, only

**[30:59]** dependency. If you step away for 90

**[31:01]** days, right, which with your current

**[31:04]** with your current team right now, not

**[31:06]** your new team that you're thinking about

**[31:07]** doing, right? Implementation, right?

**[31:10]** It's current stage with your current

**[31:12]** chart relationship that you have with

**[31:14]** your vendor, key relationship with your

**[31:17]** big client, all those things, right? How

**[31:19]** confident are you that your revenue and

**[31:21]** operation was still running without you?

**[31:25]** Zero, no confident. Three, 100%

**[31:28]** confidence.

**[31:30]** Everybody good?

**[31:33]** >> Question number three, revenue quality.

**[31:35]** How confident are you that your revenue

**[31:37]** is diversified across clients? So no

**[31:40]** concentration risk more than 15 to 20%

**[31:42]** per each client and that most of your

**[31:45]** work is repeated and contract based not

**[31:48]** one project and everything is well

**[31:50]** tracked repeatable and no one is

**[31:54]** depending on the single source lease.

**[31:56]** How confident are you on that?

**[32:00]** All right

**[32:01]** we will have a rating at the end. So

**[32:03]** make sure you take your score. We ready

**[32:05]** to go on that?

**[32:07]** All right, last one. How confident are

**[32:10]** you that your process are documented

**[32:13]** your key legal and financial document

**[32:15]** are organized and you can quickly

**[32:17]** assemble a buy a packet and then you

**[32:20]** have a plan for exit.

**[32:24]** All right, fun story for this particular

**[32:26]** piece. So about um 24 months ago I was

**[32:30]** doing a deal that we're going to buy

**[32:31]** this uh e-com we're going to buy

**[32:34]** e-commerce business actually only sell

**[32:36]** online and then I was simultaneously

**[32:38]** going to buy uh also e-commerce not

**[32:40]** e-commerce business but a product

**[32:42]** business in the exact same niche but

**[32:43]** they don't sell they don't sell online

**[32:45]** but they have all the distribution

**[32:47]** channel right so when one deal is about

**[32:50]** to combine in the other deal what my

**[32:52]** thought was okay great if I buy the guy

**[32:54]** that only sell online and I buy the guy

**[32:56]** to sell offline. When I combine that, I

**[32:58]** literally just double this business and

**[33:00]** double this business, right? The plan

**[33:02]** was supposed to work until until we

**[33:06]** spend six months in due diligence, tens

**[33:09]** of thousand dollars on lawyers fee and

**[33:11]** then we find out one thing from the guy

**[33:14]** that have the distribution channel. It

**[33:17]** turns out that he has a partner of his

**[33:21]** business. And not only that, that

**[33:23]** partner, he owed that partner millions

**[33:26]** of dollars.

**[33:27]** >> And he was going to restructure this

**[33:29]** business to kick that partner out

**[33:32]** silently and sell me that business.

**[33:36]** And I did not find out because the data

**[33:39]** room wasn't cleaning up. We had to dig

**[33:41]** and dig and dig and dig. He buried that

**[33:44]** document. So good day. I had a pretty

**[33:46]** good lawyer and I'm pretty thorough

**[33:47]** myself. And we find a document. We're

**[33:49]** like, "Wait a minute. You have a

**[33:50]** partner?" They're like, "Oh yeah, I kind

**[33:53]** of forgot the mansion." Like, "Is it is

**[33:56]** it is it clean? You guys own 50/50?"

**[34:00]** "No, he's 60." Like, "Huh? Can we talk

**[34:04]** to him?" "No, he's already, you know,

**[34:07]** like living somewhere else. We're not in

**[34:08]** contact." I'm like, "Okay, why is that?"

**[34:10]** Like, "Well, it's personal reason." Da

**[34:12]** da da da da. I was like, "Okay, let's

**[34:14]** look into it more." Then we ask him like

**[34:16]** do do you owe him is it clean? Do you

**[34:18]** owe him money? Oh yeah, we owe him about

**[34:21]** 5 mil.

**[34:23]** The deal of course fell through, right?

**[34:25]** And that cost a lot of time. So if you

**[34:27]** don't want that to happen, be honest up

**[34:30]** front. Organize all your legal document

**[34:32]** in place. So that's a little side story.

**[34:34]** So ready on this one. All right. So

**[34:37]** let's see the score now. If you have any

**[34:39]** from one of those area if you have any

**[34:42]** area that score zero to one that in the

**[34:47]** buyer's eyes it mean that okay this

**[34:49]** business is risky it's not an asset and

**[34:52]** the result is you can get low multiple

**[34:54]** high earn out and there even no offer

**[34:58]** all right so if you have any area that

**[35:01]** is a yellow meaning that is you get a

**[35:05]** two right you get a two and then the

**[35:07]** buyer will think okay this is a decent

**[35:08]** isn't enough business there may some big

**[35:10]** risk to do I will take a discount on

**[35:12]** that because it's h work to do but it

**[35:14]** may be worth the risk when that happen

**[35:16]** what that mean is you're going to have

**[35:18]** some cash up front and then you're going

**[35:20]** to have a whole bunch of string attached

**[35:23]** who wants a cash offer

**[35:26]** I want a lot of money up front right but

**[35:29]** if you have any tools they will have

**[35:31]** legitimate reasons say okay I'm not

**[35:32]** gonna pay you all that because I don't

**[35:34]** believe 100% I believe you enough but I

**[35:36]** gota trust by verify let's do uh three

**[35:38]** years, five years seller finance on 50%.

**[35:42]** And then you just like hope banking they

**[35:43]** don't mess it up.

**[35:45]** Last but not least, if you are mostly in

**[35:47]** green, congratulation. They're going to

**[35:49]** pay premium price for that. The what you

**[35:52]** want to do by that time is you want to

**[35:54]** figure out how to put yourself in a

**[35:55]** position that will be like breeding

**[35:57]** frenzy, right? That's called strategic

**[35:59]** buying, right? So you can like one guy

**[36:01]** beat on this, one guy beat on this and

**[36:02]** keep on going to happen. is it's amazing

**[36:04]** when that happen is it's it's just very

**[36:07]** fulfilling like damn right it's really

**[36:09]** cool it's kind of like selling your

**[36:10]** house if like your agent tells you we

**[36:12]** get another offer we get another offer

**[36:14]** but this in the in the business usually

**[36:16]** in the millions level very fun

**[36:20]** so

**[36:22]** from my experience after looking at

**[36:23]** hundreds of businesses these are the

**[36:26]** common area that a seven figure agency

**[36:28]** bleeding on the quality and the earning

**[36:31]** quality usually

**[36:33]** people scored around two to three and

**[36:35]** what that mean is they have some tax

**[36:37]** write off right they optimize the book

**[36:39]** based on saving and then the bias see is

**[36:42]** not clean so on the owner dependency

**[36:45]** level unfortunately I've been there for

**[36:47]** many many times zero to one you're the

**[36:50]** key man risk that's one of the biggest

**[36:53]** common challenge for agency people

**[36:55]** because we all start as almost like a

**[36:57]** technician we are really good at

**[36:58]** something and we start doing thing and

**[37:00]** we know we are the one to do this and

**[37:03]** then we have a hard time letting go of

**[37:04]** power. Now, not that you can let go 100%

**[37:06]** but chances are my bet is 60 to 70% of

**[37:10]** your work could absolutely document and

**[37:11]** repeat by someone else to do it for you,

**[37:13]** right? So, usually people score a little

**[37:15]** bit lower on that side. And revenue

**[37:17]** quality, again,

**[37:20]** key factor, you know, when you have a

**[37:21]** whale client, it's like celebration

**[37:23]** time, right? It's awesome. This guy, you

**[37:25]** know, pay me like 20% of my revenue.

**[37:27]** Like, hallelujah. But when you're

**[37:28]** selling it, the buyer is like, "Uh,

**[37:30]** that's not what I want." Because if that

**[37:32]** guy's left, I just lost 20% of what I

**[37:34]** pay you. Last but not least, um,

**[37:37]** document. Usually it's is afterthought.

**[37:39]** You create a system, you're running it

**[37:41]** for a whole year, two year, three years,

**[37:43]** it's still in your head because you

**[37:44]** still try to improve it and you tell

**[37:46]** yourself, you might be telling yourself,

**[37:48]** one day when I perfect this system, I'm

**[37:50]** going to put on a paper. Well, for

**[37:51]** example, if you are doing only SEO, you

**[37:54]** know, like that system will never be

**[37:55]** perfect because Google keep messing you

**[37:57]** up, right? So, you got to put something

**[37:59]** on the paper and start going and

**[38:00]** changing it.

**[38:02]** So, the create the real risk here is uh

**[38:05]** the buyer don't believe your story. The

**[38:07]** buyer look at your your your earning,

**[38:09]** they they don't believe it. And they

**[38:11]** look at your risk, they don't believe

**[38:12]** this is a safe business. And that's how

**[38:14]** you get discount and low offer. And

**[38:17]** again, if you think about it, if you are

**[38:19]** selling because you're ready, I've been

**[38:22]** there. You're gonna want you're gonna

**[38:23]** take the offer, which sucks. So, only

**[38:26]** sell when the business is ready, not

**[38:28]** when you're ready.

**[38:31]** So, here's a quick fix, right? When we

**[38:32]** did the survey, uh, we pretty much like

**[38:35]** break out pretty 30 30 on different

**[38:37]** sector. So, if you're running a 1 to3

**[38:39]** million agency, u, meaning on the

**[38:41]** revenue, these are the quick fix. You

**[38:43]** probably have some foundational fix is

**[38:45]** you want to clean boat separate your

**[38:47]** personal expenses and you want to make

**[38:50]** sure that you know you you can

**[38:53]** structure your business so point that

**[38:54]** you cons consistently showing uptrend

**[38:56]** for three years and then you want to

**[38:59]** start uh reducing that you are the one

**[39:01]** that doing everything. So that's the

**[39:04]** needle mover for agency that size. For a

**[39:07]** $37 million agency, chances are you want

**[39:10]** to start de-risking and start scaling by

**[39:13]** not having a concentration of one client

**[39:15]** that more than 15 to 20% of your

**[39:16]** revenue. And then you want to move to a

**[39:18]** longerterm retainer and you want to

**[39:20]** build a real relationship with layer

**[39:22]** meaning that you want to have a have a a

**[39:24]** manager in between and start introducing

**[39:26]** those relationship to it. Right?

**[39:29]** And last but not least, you kind of want

**[39:30]** to tighten up what a buyer ready mean.

**[39:33]** Start working a plan out that you know

**[39:35]** whether you want to really exit or not,

**[39:37]** but it's all unbiased. Um, have you

**[39:39]** heard he heard about this little company

**[39:41]** called IBM?

**[39:43]** IBM founder has famously said it. The

**[39:45]** reason IBM is so successful since day

**[39:47]** one, he envisioned the exit of IBM. But

**[39:50]** we all know IBM was never exit. It just

**[39:53]** went publicly. Trey, right? So when you

**[39:56]** build a when you build a business from

**[39:58]** the end to the front like that way

**[40:01]** backward you starting to see things much

**[40:03]** differently and you start envisioning

**[40:05]** things are much bigger. So last but not

**[40:08]** least, the one that doing seven plus

**[40:10]** what you really want to do, you're doing

**[40:11]** a lot of things great already. You want

**[40:12]** to start to anything the idea that

**[40:14]** instead of just having a CPA having an

**[40:17]** auditor and start auditing your book

**[40:19]** again, we talk about instead of selling

**[40:21]** from trailing 12 months, you're selling

**[40:23]** a forward 12 months and get yourself the

**[40:25]** extra 20 30%. just by paying for the

**[40:27]** audit.

**[40:29]** And then you can also um put in layers

**[40:32]** and understanding that you need to

**[40:34]** position yourself whether it's a

**[40:37]** strategic buy or roll up something that

**[40:39]** instead of just selling to a n a next

**[40:42]** guy that want to buy a job, you want to

**[40:43]** start planning that who are you want to

**[40:45]** sell it to, right?

**[40:48]** And last but not least, I want to kind

**[40:49]** of just uh inspire you this idea. This

**[40:52]** is how the um the valuation go with the

**[40:55]** with the private equity in the real

**[40:57]** world when you go public trade, right?

**[40:59]** If you are SDE doing under $2 million on

**[41:03]** net profit and $10 million in sales,

**[41:05]** you're roughly trading about two and a

**[41:07]** half eggs after earning. If you turn it

**[41:11]** to IBIDA, a professional management, you

**[41:13]** will trade about four to five 4.5

**[41:15]** roughly. That's the average. Now look at

**[41:17]** the next number. Who want to sell with a

**[41:20]** 15x

**[41:22]** 15?

**[41:23]** So if you have a business doing a

**[41:25]** million and that instead of selling for

**[41:26]** 4.5 you sell 15 million. Is it exciting

**[41:30]** that when that happened there's only one

**[41:32]** thing from IBIDA to that level is the

**[41:35]** size of the business as you can see it

**[41:38]** you're already professionally managed

**[41:40]** right the only difference is the size

**[41:42]** instead of doing under $2 million IBIDA

**[41:44]** you're doing above $2 million IDA and

**[41:46]** let me just kind of throw little hints

**[41:47]** out there the fastest way to get from

**[41:51]** IBIDA to the next level to double digit

**[41:53]** exit is something called the roll up who

**[41:56]** here have heard roll up before. All

**[42:00]** right. So, I'm just do it real quick.

**[42:01]** What roll up really mean is like for

**[42:03]** agency wise, right? Let's have uh four

**[42:07]** of our agency that is running at under

**[42:10]** IBIDA professionally managed doing half

**[42:12]** a million dollar IBIDA. Let's combine

**[42:14]** them and sell it together.

**[42:16]** Because of that, you each not only

**[42:20]** selling not at 4.5, you could be selling

**[42:24]** in double digit just because you join

**[42:26]** force under one umbrella. Look how many

**[42:29]** agencies here in this room.

**[42:32]** Can you see a roll up happening? That's

**[42:35]** how you get to the big buck without

**[42:36]** doing fundamentally something change

**[42:38]** structure-wise.

**[42:41]** So nothing to pitch. I have a 16

**[42:44]** question test is assessment that more

**[42:46]** pertain to your to your specific

**[42:48]** business. So scan the QR code. Uh once

**[42:52]** you're done with the assessment, it will

**[42:54]** give you only take five minutes. Under

**[42:56]** this uh under the 16 questions later,

**[42:58]** you'll get the buy refac

**[43:03]** and you also uh will have a prepare list

**[43:06]** on prepare you when you want to sell

**[43:07]** between 8 to 36 months.

**[43:11]** Everybody get that before I change to

**[43:12]** next slide.

**[43:14]** All right, take the assessment. It's

**[43:16]** good stuff.

**[43:17]** >> So that 18 36 months is that from start

**[43:20]** date or from the time you're planning to

**[43:22]** exit

**[43:22]** >> from your plan to exit.

**[43:24]** >> So in your uh experience, how many years

**[43:28]** does it usually take business to get

**[43:30]** ready for that 36 month?

**[43:33]** >> Great questions. So I have seen anywhere

**[43:36]** between six to 36 months. Now six months

**[43:39]** is like you know how I was talking about

**[43:41]** there's four area right each like four

**[43:44]** area and then there's 26 things to do

**[43:47]** right 11 thing to do on earning side 15

**[43:50]** things to do on the multiple side it

**[43:52]** depend on like how much time you allow

**[43:54]** yourself to hit all those things right

**[43:56]** it's really I hate to say it's really

**[43:59]** depend but I've seen as fast as six

**[44:00]** months if you come um you know you you

**[44:03]** tell me like oh I have the key man

**[44:05]** effective already removed I just want to

**[44:07]** you know tighten up the revenue and

**[44:08]** they'll clean up the books all those

**[44:09]** things those are fast right but if you

**[44:11]** say oh I'm still the you know the guy

**[44:13]** that running everything now that takes

**[44:15]** time to hire the a player to train the a

**[44:17]** player to think like you make decision

**[44:19]** like you right that that's what usually

**[44:21]** take the longest time does make sense

**[44:24]** right so I would say at fast is six

**[44:26]** months um 18 months is the medium 36

**[44:29]** month you pretty much get it done pretty

**[44:31]** good

**[44:34]** >> yep

**[44:37]** I was just going to ask like on a

**[44:39]** business or category that's hot like

**[44:41]** that spot is there a time reduction

**[44:45]** like you sell it in six months because

**[44:47]** it's hot

**[44:49]** >> great question

**[44:50]** >> Joe can you repeat the question

**[44:52]** >> all right the question Chad asked is on

**[44:54]** a very hot market like Masbar right like

**[44:57]** can you reduce the time to get ready to

**[45:00]** get the highest multiple right the

**[45:02]** answer is it also it depends think about

**[45:04]** it the highend of that category right

**[45:08]** now is 8x. You could be the low end and

**[45:11]** 5x. So you have a range, right? It's

**[45:14]** always a range, right? So what I mean by

**[45:17]** that is you never chase the number of

**[45:20]** the multiple because it's never up to

**[45:22]** you, right? We who here own a house or

**[45:26]** own a house before, right? What is your

**[45:28]** house market value? What's your house

**[45:30]** value?

**[45:33]** >> Exactly. business is exactly the same

**[45:35]** way, right? That mean some crazy people

**[45:38]** think, "Oh, you know what? I'm really

**[45:39]** looking at the industry. This is my 15.

**[45:42]** It happens." But those are off, right?

**[45:45]** You can never control the actual

**[45:48]** multiple number, but you can control the

**[45:50]** range that you'll fit in at that one

**[45:53]** given time market. Does that make sense?

**[45:56]** Great question. And you have a question.

**[45:58]** So a couple slides ago you showed that

**[46:00]** if you go back just a couple slides, the

**[46:02]** one where Yeah, that one. So how come

**[46:05]** that third one is 15.2 times when it's

**[46:09]** growing at a 32% increase? Why is the

**[46:13]** next one 21.3%

**[46:15]** when there's no change?

**[46:17]** >> Yeah, it's because you're the big boy.

**[46:19]** The private equity bought you. They they

**[46:22]** saw your track record. They're going to

**[46:23]** take over

**[46:25]** >> even though it's not showing the same

**[46:26]** growth. You have to have the 32 already

**[46:29]** to start.

**[46:30]** >> Yeah.

**[46:30]** >> Yeah. Sorry about the confusion but yeah

**[46:33]** you have to maintain the three years

**[46:34]** growth with that number then like okay

**[46:36]** after we take over we can grow 200%.

**[46:40]** Like you'd be amazed the resources like

**[46:42]** private equity has that they they really

**[46:44]** know like they don't mess around you

**[46:46]** know if they buy a company for like $10

**[46:47]** million they will turn around make 50 in

**[46:50]** a year like it's crazy what they can the

**[46:53]** resource the talent they have because

**[46:55]** they have money they buy the best like

**[46:57]** expert and this and they combine it they

**[47:00]** do some crazy stuff.

**[47:06]** All right. Well,

**[47:07]** >> just one question obviously here today

**[47:10]** so many people are going to walk out of

**[47:11]** here changing

**[47:13]** what Ted talked about versus something

**[47:16]** like a med spot where the turnover and

**[47:18]** the technology change in your in terms

**[47:20]** of their daily practices might be 10% a

**[47:22]** year or pick a number whereas we might

**[47:24]** change 40% with the AI versus two years

**[47:27]** ago we're almost 80 70 80 90% different.

**[47:30]** So, how do we get that degree of

**[47:31]** certainty? Someone's still going to want

**[47:33]** to buy us. It's because of the the value

**[47:34]** of the retainer because we have such

**[47:36]** high turnover on the day-to-day

**[47:37]** practices of what we're doing.

**[47:39]** >> Yeah, love that questions.

**[47:41]** What you want to do is that's two level

**[47:43]** of SOP. The first level SOP is the tech

**[47:46]** technical SOP, right? How do you

**[47:47]** actually do this thing? You've forgotten

**[47:50]** today. You're sitting here spend your

**[47:52]** time to come to come to this event and

**[47:53]** learn this thing. It's a yearly thing,

**[47:55]** right? That is SOP.

**[47:58]** That's how you learn, right? That's SOP.

**[48:01]** If you have a manager, that's what you

**[48:02]** would do, right? Every year go to SO

**[48:04]** Rockstar and learn the thing and

**[48:07]** implement that. You see what I mean?

**[48:08]** It's like a SOP on that's how you run.

**[48:16]** >> So, so the education, the ability to

**[48:18]** handle the turn around changes.

**[48:20]** >> Yep.

**[48:20]** >> That's we document that as part of the

**[48:22]** SOP on paper and then train the person

**[48:24]** starting to think like us.

**[48:26]** >> Yes.

**[48:26]** >> Thank you. Like what like like I feel

**[48:28]** sorry I said before right the decision

**[48:30]** tree how do you make decision and here

**[48:33]** that's what you're doing here you

**[48:34]** collect information right something

**[48:36]** brilliant everybody say t say right then

**[48:38]** you make a decision on okay which one

**[48:39]** I'm going to implement first you have

**[48:42]** that in your you know you're not going

**[48:43]** to implement everything today you know

**[48:46]** how you prioritize you just never

**[48:47]** documented it and AI literally is going

**[48:50]** to help you recognize my pattern

**[48:53]** recognition on how I make decision this

**[48:55]** how I make the last 10 decision

**[48:58]** they always see a pattern and that's

**[48:59]** trainable.

**[49:01]** >> Yep.

**[49:02]** >> So if you have a business um and you

**[49:06]** talked about separating the personal and

**[49:07]** the business, but what if the business

**[49:09]** also has assets for example that

**[49:13]** may or may not be attractive to a buyer?

**[49:16]** You're using agencies that let's just

**[49:18]** say you have an

**[49:26]** agency that's an asset, but it can also

**[49:28]** be separate. So, can you when you're

**[49:29]** when you're doing your business, do you

**[49:31]** would you separate it two separate

**[49:33]** things?

**[49:34]** >> You see the smile here? I love that

**[49:36]** question. This is cool. I'm going out

**[49:38]** with that a little bit. So, the answer

**[49:39]** is yes and no. Let me ask you this

**[49:41]** question.

**[49:42]** The earning there for your agency is

**[49:45]** that we how how much is contribute

**[49:47]** because of this 6,000 link you have. If

**[49:50]** without the 6,000 link, can this

**[49:52]** business still make the money like it

**[49:54]** is?

**[49:54]** >> Yeah.

**[49:55]** >> If the answer is yes, then

**[49:56]** congratulation. You would do a cough

**[49:58]** out, what they call a cough out

**[49:59]** internally. You want to have a separate

**[50:01]** entity, right? Create a separate entity,

**[50:04]** own that 6,000 link, right? for whatever

**[50:08]** you need to do because you you tell me

**[50:09]** the agency don't need it for that. So

**[50:12]** you would remove that to the entity

**[50:14]** first and just sell the book of the

**[50:16]** agency. So that way you still keep that.

**[50:18]** They call it like you asked me that. You

**[50:22]** asked me that, right? Mike asked me that

**[50:23]** when we're doing the valuation call. Um

**[50:25]** there's another story. Super cool. Um

**[50:27]** that's called um the goose and a right.

**[50:31]** If the 6,000 link is what give you the

**[50:33]** power to do what you need to do in terms

**[50:35]** of ranking wise that's the goose the

**[50:38]** eight is the agency because of this

**[50:40]** 6,000 you're able to serve the client do

**[50:42]** ABCDFG so what is the beauty part of

**[50:45]** this you keep this a

**[50:48]** buyer buy I mean you keep the goods the

**[50:50]** buyer buy the the buyer buy the egg

**[50:52]** they're still going to have to pay you

**[50:53]** for this thing and you can still you

**[50:55]** know use this to monetize and provide

**[50:57]** services for other things and so this

**[50:59]** thing you should never Well, like that's

**[51:01]** why Taylor Swift bought all her album

**[51:04]** right back cuz those are the goose.

**[51:08]** >> Great question.

**[51:10]** >> Yeah.

**[51:11]** >> Will that lower your valuation if you're

**[51:13]** keeping the goose? Will the buyer be

**[51:15]** like, well, if I have to buy if I have

**[51:17]** to buy this from you, it's going to cost

**[51:20]** more.

**[51:21]** >> Yes and no. That's why the the key

**[51:23]** question it really is everything you

**[51:26]** say, everything you provide on the boat,

**[51:28]** you it has to be defendable. If I the

**[51:30]** buyer is gonna ask the same question.

**[51:32]** Okay, great. And so you're telling me

**[51:34]** that um the agency is going to run exact

**[51:37]** same way, create exact same result and

**[51:40]** income without your link. Prove to me if

**[51:44]** you can prove that then there's go. It's

**[51:45]** a separate entity. I'm not selling you

**[51:47]** this. Sorry. I'm selling you this. Now

**[51:50]** if you want to buy it, we can make a

**[51:51]** deal. Right? It's all making a deal. So

**[51:55]** that is really depend on can you prove

**[51:57]** that story, right? Whatever you put on

**[51:59]** the book is there's a story to tell. Can

**[52:02]** you defend their story? Like literally

**[52:04]** not like trick them, you know, with

**[52:06]** manipulation. It's truly defend the

**[52:07]** story. If you cannot, don't do it

**[52:10]** because you just break the trust. You

**[52:11]** break the trust, they're going to walk

**[52:12]** away. You have to understand that this

**[52:14]** big time buyer, you know, hopefully

**[52:15]** you'll all get to the level selling for,

**[52:17]** you know, tens of millions. That's my

**[52:18]** goal for you. They understand. They

**[52:21]** understand. They're not a lot of them

**[52:22]** are pretty honest about it actually.

**[52:24]** They're not here to game you. They just

**[52:26]** really try to understand because they

**[52:28]** have invested in they have investor to

**[52:30]** answer to themselves, right? So you have

**[52:32]** to able to defend whatever you tell

**[52:34]** them.

**[52:36]** >> Go ahead Pete first. Sorry. Go ahead.

**[52:38]** >> Do do vendor relationships or vendor

**[52:41]** stability come into play at all?

**[52:42]** >> Absolutely.

**[52:44]** >> Yep. So let's say you have for example

**[52:46]** the only thing I can think of you know

**[52:48]** correct me if I'm wrong. The vendor

**[52:49]** relationship for any agency you have is

**[52:51]** either a um maybe service provider like

**[52:54]** the white labeling right or a software

**[52:57]** right so as long as you have a contract

**[53:00]** clearly say this is transferable

**[53:04]** right this is transferable then the blog

**[53:06]** is like okay it's transferable no

**[53:08]** problem

**[53:10]** and

**[53:11]** >> actually

**[53:13]** I assume correct me if I'm wrong if you

**[53:16]** had a carve out you would want to move

**[53:18]** that separate entity as part of the

**[53:20]** carel process or it's part of the

**[53:21]** cleanup process.

**[53:23]** >> Yes.

**[53:23]** >> Y

**[53:24]** >> so like you're talking about a bunch of

**[53:26]** URLs that they become a vendor for your

**[53:30]** agencies.

**[53:31]** >> Yep.

**[53:32]** >> And then when somebody buys your

**[53:33]** business, they could choose another

**[53:35]** vendor theoretically if they wanted to.

**[53:38]** >> Yes.

**[53:38]** >> Correct.

**[53:40]** >> That's great question and statement

**[53:42]** right there too.

**[53:43]** Ideally, if you do cough out like that,

**[53:46]** you better make sure that the agency can

**[53:48]** really function without it. Really like

**[53:51]** if they want, let's say you own a

**[53:52]** software company, right? Let's say you

**[53:53]** own a software company, doing a whole

**[53:55]** bunch of awesome ninja co SEO stuff and

**[53:57]** you own the agency that you actually pay

**[53:59]** the software company money to use it.

**[54:01]** You better make sure that the agency can

**[54:03]** function and produce the exact same book

**[54:05]** without this software. Meaning that you

**[54:07]** can if you go to if they choose to go to

**[54:08]** your competitor, so be it. That's how a

**[54:11]** clean cut out need to happen.

**[54:14]** >> So you she so you disclose whatever your

**[54:16]** other entities are the end.

**[54:18]** >> You do. Yeah. Because it's on the book,

**[54:20]** right? Like for your case, right? I

**[54:22]** assuming there'll be a line item on your

**[54:25]** book saying that okay, I'm paying this

**[54:26]** software I don't know this 6,000 lane

**[54:28]** 200k a year,

**[54:30]** >> right?

**[54:30]** actually my my example although I do

**[54:33]** play pay

**[54:34]** some people in here for just like that

**[54:37]** and things like that but I was referring

**[54:39]** more to if I have domains and I have my

**[54:42]** own PBNs if

**[54:43]** >> what's that

**[54:44]** >> I'm sorry if I just have if I just have

**[54:46]** my own uh network

**[54:48]** >> okay

**[54:48]** >> and maybe I do le I don't pay anybody

**[54:52]** >> well I can help Joe because I don't have

**[54:54]** >> but what I'm saying is I I own this

**[54:57]** >> has to be able to rank without it and so

**[54:59]** if you take your link I don't know what

**[55:00]** my question is.

**[55:02]** >> I don't have to remove a link. My

**[55:05]** clients can keep the link. I own this,

**[55:06]** but I I may link to it uh industry A, B,

**[55:11]** C.

**[55:12]** >> Now, if I'm a buy your agency and I see

**[55:14]** them incoming links, I'm going to say,

**[55:15]** hey, what is this? And then I'm going to

**[55:17]** ask you and be like, why wasn't this

**[55:18]** part of the acquisition? So, there's a

**[55:20]** way around it, I'm sure, but it needs to

**[55:23]** be really

**[55:23]** >> So, you're talking about link. I'm

**[55:24]** talking about the property. Just let's

**[55:27]** say it doesn't have links. Let's just

**[55:29]** say that I'm selling SEO Superstar and I

**[55:34]** have a link that's SEO Superstar Texas

**[55:38]** and I don't have anything on there. I

**[55:40]** have no I just own a domain

**[55:42]** >> and I have tons of domains.

**[55:44]** >> No, that's your is a brand trademark.

**[55:47]** That's all yours.

**[55:48]** >> That's yours.

**[55:48]** >> That's all yours. Now, you wouldn't be

**[55:50]** able to go like work on that brand that

**[55:52]** you just sold them

**[55:54]** would be yours

**[55:55]** >> that lasted four minutes.

**[55:56]** >> Correct. So the bottom line is the buyer

**[56:00]** is buying your book of business, right?

**[56:03]** It could be branding, it could be some

**[56:04]** IP in place, but whatever they buy from

**[56:07]** the book, right? There's some numbers

**[56:09]** contribute to the bottom line, right?

**[56:11]** The expenses, the revenue. As long as

**[56:13]** you can prove that whatever you coughed

**[56:15]** out, that number, the meth the

**[56:18]** mathematic behind it, the formula,

**[56:20]** whatever, right? The number that comes

**[56:22]** out is still the same. Then you're good

**[56:24]** to go.

**[56:26]** Anyone

**[56:29]** else questions?

**[56:30]** >> Thank you, Joe.

**[56:31]** >> Oh, one more question.

**[56:34]** >> One question. So, I've told businesses

**[56:36]** before, like smaller businesses, but

**[56:38]** when you get to private equity, does it

**[56:40]** have to be uh like uh uh on the stock

**[56:43]** market list or how do you get these

**[56:44]** private equities to look at a business?

**[56:50]** >> The connection.

**[56:52]** >> Yeah, it's not pitch, but it really is

**[56:55]** connection. Like

**[56:56]** >> are you a broker?

**[56:57]** >> I'm not a broker.

**[56:58]** >> Like I'm what I mainly do is I'm

**[57:00]** investor myself, right? My goal is to be

**[57:02]** part of the exit. But before that I we

**[57:05]** need to vet people, right? Not everybody

**[57:06]** can, you know? So what I do is I'm exit

**[57:09]** planner. I'm help you plan the exit so

**[57:12]** you can get the most out of it, right?

**[57:14]** Like we did the evaluation call like the

**[57:17]** whole thing that I show you about the

**[57:18]** 26. I mean it's 26 things. How do you

**[57:22]** know which one to do first? Right?

**[57:24]** That's a path as each business is

**[57:26]** unique. There's no like one size f but

**[57:29]** those 26 thing it is the 26 things. It

**[57:31]** just matter of which business need to do

**[57:33]** what first to create the most result and

**[57:35]** get to the other like a compounding

**[57:37]** effect right so that's kind of really

**[57:39]** kind of like what you guys doing with

**[57:40]** SEO like do you do the map thing first

**[57:42]** do you do the link first right it's

**[57:44]** that's that's the right order of doing

**[57:46]** things but each business is a little bit

**[57:47]** different so to answer your question

**[57:51]** you can get to private equity

**[57:54]** mostly because of relationship because

**[57:56]** they also want to trust they private

**[57:58]** equity job is to buy deals

**[58:01]** Right? They don't lack the job is not

**[58:04]** they don't lack of money, right? They

**[58:05]** have infinite I don't know why, right? I

**[58:08]** wish I do. They have infinite amount of

**[58:10]** money to buy things. So the job is to

**[58:13]** figure out what is a good deal. So you

**[58:16]** can see the bottleneck, right? The

**[58:17]** bottleneck is junk deal. That's the

**[58:20]** biggest cost. Like you know, long story

**[58:23]** short, you know, I shouldn't tell the

**[58:24]** story. It's recorded to ask me after the

**[58:26]** call, not recorded. I'll tell you story

**[58:28]** then you like boom. Right? Like one last

**[58:31]** things um to kind of give you an idea on

**[58:33]** who buy agency. Literally this la not

**[58:36]** last Monday this past Monday I just

**[58:38]** talked to uh one company they sold to

**[58:41]** Fiverr.

**[58:44]** >> An agency did.

**[58:45]** >> Yeah. Agency sold to Fiverr. Fiverr by

**[58:48]** agency.

**[58:49]** >> Were they already on Fiverr?

**[58:51]** >> They were. And then if you Google

**[58:53]** literally Google right now like Fiverr

**[58:55]** acquisition that's Fiverr spent eight

**[58:57]** figure by agency. it happened. Now I'm

**[59:00]** not saying all will be qualified but I'm

**[59:03]** saying it could be engineered to make it

**[59:05]** happen now that you know five or five

**[59:06]** people. Yeah.

**[59:08]** >> So if like med spas are the hot thing

**[59:10]** right now in private equity that's like

**[59:13]** something like the agency market

**[59:17]** where does that rate in terms of being

**[59:19]** kind of hot or cold?

**[59:22]** The truth is it's is

**[59:24]** no control is it's like AI everything is

**[59:28]** AI is hot right let me give you an idea

**[59:30]** for a while have you heard of a company

**[59:32]** orange fury

**[59:34]** >> it's pretty it's pretty good right they

**[59:36]** they got something cool you need to

**[59:37]** figure it out at one point oh last tips

**[59:40]** at one point well sorry let me rewind

**[59:44]** back if you have two companies side by

**[59:46]** side one is regular company moms and pop

**[59:48]** runs right and one is under franchise

**[59:51]** Okay, doing the exact same thing, same

**[59:53]** book. Chances are the franchise one will

**[59:56]** sell at least one to two times more on

**[59:57]** multiple and the reason for that is the

**[01:00:00]** risk fan. What the franchise have beside

**[01:00:03]** the brand systems? They have a flawless

**[01:00:06]** system in place. You would argue, right?

**[01:00:08]** And that's why McDonald can turn out

**[01:00:10]** like nothing Subway. That's why the

**[01:00:13]** system what I'm showing today is what

**[01:00:15]** makes to eBay, right? It's the system in

**[01:00:17]** place. That is the same effect as if you

**[01:00:20]** buy a franchise. So to answer your

**[01:00:23]** question, you really don't know because

**[01:00:26]** even orange free like it's a gym. How

**[01:00:29]** much can you sell at one point? Orange

**[01:00:31]** pe will sell for 20 eggs. It's a

**[01:00:34]** freaking gin.

**[01:00:35]** >> Oh my gosh.

**[01:00:37]** >> But no one can ever game this kind of

**[01:00:39]** market unless you you you your market

**[01:00:42]** maker, right? Like you know I work with

**[01:00:43]** a lot of you know my mentor like some of

**[01:00:45]** them are market maker. What that is is

**[01:00:47]** um let's say uh I share with Brian the

**[01:00:49]** other day so I'm not going to go in

**[01:00:51]** detail a little bit. Um let's say uh

**[01:00:53]** mass buy is hot. All the private

**[01:00:54]** equities like oh this is hot. I'm going

**[01:00:56]** to buy all up I'm over bidding on that.

**[01:00:58]** Right. They are they are there deal

**[01:01:00]** maker out there quietly making a new

**[01:01:03]** class of industry and repackage it and

**[01:01:06]** show it to the public equity something

**[01:01:08]** that maybe in regular people eyes is

**[01:01:10]** like oh yeah I'm going to pay you one or

**[01:01:11]** two if you're lucky but when they're

**[01:01:13]** done the public I'm gonna pay you 10 for

**[01:01:16]** that that's the real game comes and

**[01:01:19]** that's financial engineering

**[01:01:26]** >> thank you thank you Hey yo.