How to Avoid Selling Your MSP for Only $14,000
Summary
In this podcast episode, Joe, Jeff, and Hartland Ross discuss the importance of having an exit strategy and processes in place for MSPs to avoid burnout and increase the value of their business.
He also highlights the benefits of acquiring and growing a book of business and advises sellers to understand the limitations of their business and what it is worth.
The conversation also touches on the emotional process of selling a business and how one may want to consider what they plan to do once the business is sold.
Featuring
Hartland Ross, Founder and Managing Partner of The Host Broker & The MSP Broker & President of eBridge Marketing Solutions
Hartland began his entrepreneurial career in the building materials industry as a successful franchise owner and operator. He followed this up with a stint in the pulp and paper industry before landing positions with two different internet marketing start-ups in the online marketing sector. He then took his online success and became VP of Sales and Marketing for a national training and development company.
Corporate philanthropy is top of mind for Hartland who believes it’s important to give back to his community. Hartland is a past board member of Young Entrepreneurs Association, was a mentor at Junior Achievement helping youth become the business leaders of tomorrow, is a mentor and advisor with Founders Institute as well as with the Beedie Luminaries Group, and an active member of the Entrepreneur’s Organization (EO), is a board member and ski coach with the local Grouse Tyee Ski Club and coaches two boys soccer teams.
What is the problem you solve, and for whom?
In what is a very fragmented and competitive industry, we provide opportunities for IT firms to grow both organically as well as through mergers and acquisitions. We have served the IT services community with this unique model for over 20 years, bringing a level of trust and value to an industry faced with a lot of noise.
How do you help MSPs
By providing opportunities to grow or in the case of sellers, helping them find a new home for their customer base
Your Company Website/URL
What you are promoting:
Subscribe to our free weekly mailing of IT firms for sale at: www.thehostbroker.com
Transcript
Joe Rojas: Hello and welcome to the Start Grow Manage podcast. I am Joe.
Jeff Loehr: And I’m Jeff. And I’m actually Jeff.
Joe Rojas: No, I don’t buy it. I don’t think so.
Jeff Loehr: Yeah. Here’s the thing about AI systems I discovered when I was relegated to the back room watching television is that we actually control the on and off switch.
So all you have to do is turn the electricity off. Oh, and the AI’s gone, man.
Joe Rojas: So what happened to all the kicking and screaming I heard in the background the whole time?
Jeff Loehr: It took me a while to get to the circuit breaker, but once you get there, it’s not; what was that movie? Like the Terminator or Arnold Schwarzenegger with the yeah.
Joe Rojas: Terminator three. The, which
Jeff Loehr: no. The one where like it was all the trucks that took over.
Joe Rojas: Oh, that was the Stephen King one. Oh, God. I know the movie you’re talking about.
Jeff Loehr: Yeah, but see, it’s not like that. Here we can absolutely turn Chat GPT off. So if you hear screaming in the background, it’s definitely not Jeff.
Good.
So today, we’ve caught Hartland Ross. So Hartland Ross is the president of eBridge Marketing Solutions, and he has been supporting MSPs in growing through marketing and has an exciting business. It’s a business or side hustle. So we’ll get into that.
Helping them grow through acquisition and get out of their businesses through divestment. Hartland, welcome to the Start Grow Manage podcast.
Hartland Ross: Excellent. Thanks, guys. Happy to be here. Thanks for having me. And yeah, looking forward to our chat this afternoon.
Jeff Loehr: Yeah, me too, especially, and this is the thing that I really wanted to talk about.
It’s really the most important thing I saw on your LinkedIn profile. Tell me a little bit about Grouse Mountain.
Hartland Ross: I know what you saw. So we’re based in Vancouver, British Columbia. If anybody knows anything about us, as sort of mountains meets the water.
And so we’ve got mountains in the backyard, and you can ski and look down on the downtown city core at any given time. And there’s a ski club up there that. My kids are involved and I coach skiing on the weekends during the winter.
Joe Rojas: You just made a new best friend; so cool.
Jeff Loehr: I am a big skier. Unfortunately, I’m just stuck in New York where they have these little molehills that they own mountains. Yeah. And it’s unfortunate, but I’ve been dealing with the fact that out west, where I like to go skiing, we’re up at about 800 inches of snow this year, and that’s what I call paradise.
Have you guys been in the same situation?
Hartland Ross: Nothing like Tahoe and the pictures I’ve seen; that’s just off the charts. It’s just incredible. We get a lot of snow here. Not that much, but it’s also not so concentrated, nor is it regularly there. But anyway, we’ve had a good season.
It’s better than some; it isn’t as impressive as others. But it’s definitely been a good season. And skiing here because of the volume of snow we get will continue for some time. In fact, it goes until about the end of May in Whistler, which is about an hour and a half from here.
Jeff Loehr: Palisades, which I used to call Squaw Valley, but they had to change their name to Palisades. They have promised to be open through the July 4th holiday, so they will be open.
Hartland Ross: Wow.
Jeff Loehr: Through the first week of July. In years like this, when they’re open until July, the skiing is pretty bad in July. Like they’ve taken whatever snow’s left and made a little pile out of it, and they’re two or three people going down the snow. But it’s one of those things where they say, we’re open on July 4.
Hartland Ross: Fame. Yeah. And the little runways,
Jeff Loehr: Exactly. And everybody’s lined up in a single pile. But cool. So I love Grouse Mountain and coaching, and skiing.
So what tore you away from the mountain to get into this world of marketing MSPs? If you’re so close.
How Ross got started
Hartland Ross: We’ve been at it for a long time, and truthfully, I’d love to say it was a little bit more strategic than it actually was. We began in 2000. I started the business, and this was, or, sorry, 2001, excuse me, after-
Jeff Loehr: So you’ve been at this for a while?
Hartland Ross: Yeah. After the Twin Towers and 9 11. I began the business. And our focus at the time was on providing marketing services to B2B online solution providers for small businesses. Okay. That was really the focus cause the adoption was there.
It could be sold through e-commerce. You could purchase whatever it was with a credit card. So these were subscription-type services, and we found a lot of traction with web hosting. And so people needed to get their site up. Everybody needed to get online. And so, for $5 a month, $10 a month, you could get yourself online.
So you. You got a website. So we ended up working with likes of GoDaddy and Host Gator and Lunar pages and Blue Host and all of these reasonably well-known shared web hosting companies and, so over time,
Jeff Loehr: but this was back when we were creating websites with Dream Weaver and didn’t Microsoft have a thing, like you could create a website in Word and then it no. It was, it saved it, and it looked terrible.
Hartland Ross: I believe you could, yeah. I never did that. But you’re right; it was Dream Weaver. It was some of the HTML editing tools. It was cold fusion, this type of thing. Very much. Yeah. Feels like another lifetime. But that’s where we started.
Jeff Loehr: Remember how impressed we were when you could divide the screen into multiple screens?
Hartland Ross: Yeah.
Jeff Loehr: And we thought that was so cool, and it turned out that was a dumb idea. And then we all had to go back to tables, which was like, but we all had different screens all filled out.
So that’s your world where you started.
Growing Hosting Companies
Hartland Ross: Yeah, so we started working with the hosting companies and then got a lot of traction there and helped many of them to grow. I worked with the founders of virtually all of those businesses personally. And as they started to grow continually, we were helping them.
In some cases, they moved up the stack themselves and provided more of a managed type of offering. And then, they introduced us to some of their partners upstream. So we worked with dedicated co-location service providers, which led us to data centers.
And then the cloud came along. And the whole virtualization. And so we started working with those providers.
Jeff Loehr: So who would you say, like today, who would you say your target customer is? Your ideal customer avatar.
Our Target Avatar
Hartland Ross: At this point, we still work with every group that I just mentioned as well as the ancillary sort of services to the industry where there’s be vendors, ISVs, if you like to, to the space.
And then, as time went on, we also started working with managed service providers. So, I mean,
In terms of our ideal customer, at this point, it’s recurring revenue model business. This would include SaaS, historically herein, but that’s been less of our focus because we tend to focus more on service-based businesses.
So it’s a recurring service-based business model. So MSPs, web hosting infrastructure, may be on a contract, the customer or they may not be. But the point is they’re paying monthly for a service with reasonably high switching costs in most cases.
Joe Rojas: You’re doing Voice Two and SaaS and all the others that you know; you’re doing all the other MRR ancillary MSP services
Hartland Ross: Right. So as long as it falls under those services ,IT service providers would typically provide backup solutions, office 365 ,security solutions, et cetera.
So those vendors, of course, have a recurring SaaS type business, but their customer is the IT service provider, the MSP and whatnot. And so our clients. We are, for the most part, those IT service providers, but we have done work for some of those vendors over the years.
Jeff Loehr: So what is the problem that you solve for them? So you’re working primarily with the MSPs, the service providers, right?
Hartland Ross: Yeah.
Jeff Loehr: We always talk about the person you’re solving the problem for and the problem you’re solving for them. So what is the problem that you’re solving for them?
Hartland Ross: In the early days, it was a land grab. Try to put a stake in the ground and get as much market share as quickly as possible. And so we were helping companies do this organically through marketing. But as time passed, the cost increased because it became more competitive.
So everybody and their uncle was starting a hosting business. And they were coming online, and people were coming outta the woodwork. And so it didn’t take much to throw up one of these businesses. And so the cost to acquire our customer were, we’re getting to the point where it wasn’t workable.
Jeff Loehr: For the MSPs.
Hartland Ross: For the hosting company or the it Oh, the hosting provider, whoever. The cost.
How did you acquire customers?
Jeff Loehr: How did you acquire customers back when you did this?
Hartland Ross: So most people would say it was Google. And yes, it was Google to some degree, but Google was also one of the more expensive ways to go about that process, and the costs were going up there.
So our value was bringing opportunities to our customers that needed to be better known. It wasn’t running Google; it wasn’t paying for social ads initially.
There were no,
Jeff Loehr: yeah, there were no; 20 years ago, there was no such thing in social ads.
Yeah. That’s, was it just all, it was just all. All search.
Hartland Ross: So it was ads, right? It was banner ads. It was embedded links. It was sponsorship opportunities. It was newsletter ads. It was affiliate deals; it was all of those types of things.
And now you gotta find those. How do you find them? You come to us and say, here’s what I do. How, here’s who I wanna reach, how can I reach them? And we had an extensive network of different opportunities to work with our clients on. So we would manage those.
Jeff Loehr: What would you say is different now, in the marketing landscape from then?
We’ve moved beyond banner images, but they’ve returned, right? Like with remarketing, putting images in content, and that sort of thing. But it’s interesting that trajectory from 20 years ago today. What do you think are the big shifts?
Hartland Ross: The reason that we don’t do that much of that anymore, and we are still very active from a marketing perspective, we’re just not doing those same tactics, is that frankly, over time they became less effective. So banner ads were less effective. Um, and sponsorships and less effective newsletters weren’t getting open.
So let alone like seeing the ad, they weren’t opening the. Newsletter to be able to see the ad in the first place. Yeah. So then click on the ad. So it was a trickle-down effect. And again, the costs were going up because the acquisition cost was increasing. And of course, the vendors, the publishers, if you like, it’s a better term. We’re unable to generate as much revenue from the same number of visitors to their website or subscribers newsletter. So they needed to charge more, but it created a vicious circle where the ROI wasn’t there. And so this all led into answering your other question, which you said in the beginning was okay, what’s the value we provide?
What value do we provide
Hartland Ross: So, in the beginning, the value was we’ll help you grow your business and generate leads at a price point that makes sense for you. But over time, that argument became harder and harder for us to fulfill. And then many of those companies said, look, we’re at the point now where we’re large enough that we can afford to buy another company.
Do you know anybody interested in potentially selling? Because we would like to acquire them. And we had a lot of groups who had gotten to the point where they were burnt out. They hit a capital ceiling.
It was very costly, and capital intensive, particularly if you’re in some of those with dedicated servers and data-centered businesses. So, as a result, some of these smaller players decided to tap out and look to be acquired.
And, of course, the bigger guys who had run that race a little bit faster in the years earlier were at the point where they could make an acquisition from surplus cash from operations. And it was really by accident that that process fell into our lap.
Jeff Loehr: So that’s when you shifted to more of this M&A model, right?
Hartland Ross: I wouldn’t say we shifted more to it. We just added that, and it became additive to our services. We are very active in that space now.
MSPs don’t have an exit strategy
Joe Rojas: Yeah. And it’s really interesting because we’re seeing that a lot of the MSPs, some of them, the smaller ones that have been around for a long time, don’t have an exit strategy, don’t have a way.
Yeah. So this is a way to think about how I get out? I’ve been at this for a long time and don’t want to do it anymore, but I can’t stop. Yeah
Jeff Loehr: One of the reasons why they’re all so tired and burnt out is because a, they’re agnostic, B, they haven’t put processes in place, and c, they haven’t built the machine, right?
Yeah. So one of the reasons MSPs end up burnt out and overtired is that they need to put the pieces in place to have a reasonable business.
But I love the idea. But the exit strategy is key, right? So how do you get out of the business?
Hartland Ross: Yeah. This is a fair statement for many business owners that it just, at some point, they gotta do something, but it’s not on their horizon right now.
Set up an exit strategy
Hartland Ross: And as you said, their business still needs to be set up for an exit. So that’s, yeah. An important point I like to make is to think about ultimately, even if it’s 10 years from now, what does that look like? How big do I want my business?
What’s my business worth now? What might it be worth then, so you could understand, cause I have conversations with groups that say, look, I’m interested in selling. I’m burnt out, tired, and going through some personal challenges. I need to sell the business. And they have expectations for what they want for the business.
And in some cases, sometimes, not always, but sometimes, those expectations are mismatched with the reality of what the business is worth.
The difference between high and low-value businesses
Jeff Loehr: What would you say drives the value? What’s the difference between a business that sells at a high multiple and one that sells at a lower multiple?
Hartland Ross: There’s a bunch of drivers. Then, one of the biggest ones is the size of the business. And is there a commensurate with the size?
So revenue is usually some systematization cause you can’t get to that level if you don’t have some of these processes in place. And operational maturity, if you like, from using the service leadership language. But you’re gonna have that middle layer of management, right?
You’re gonna have those KPIs. You’re gonna have the different functional areas built out. And so it becomes, as you said, a machine. So there’s part and parcel where you can’t get to those numbers without having that but the value. Is having a large book of business, the value is having a machine that produces, you know, throws out cash, and you have a team in place where everybody’s in the right seats and knows their role, that can do that.
That’s part of it. There are lots of other elements as well that I’m happy to jump into if you want. There are quite a few of them.
Jeff Loehr: But I think it, ultimately, the idea is you’ve got some of the systems in place.
What is it? What’s the word? Systematization.
Joe Rojas: That’s the one
Jeff Loehr: You systematized your business. You’ve got the processes in place so that you have something. Without that, all you’re selling is a book of clients. All you’re selling is access to a bunch of people .
Hartland Ross: If they’re on contracts, at the very least you’re selling. If they are, and they’re not always, you are also selling an annuity. It’s not just access, but you’re selling that book of business that’s gonna produce an annuity payment for you. And so long as, yeah.
If the buyer doesn’t mess up the transition process, those customers will likely stay on and be sold additional services, upsold or whatnot, or move to a contract in an auto new contract. The other thing, of course, is that to the extent that there’s a team in place, and the team might be a team of one outside the owner, but it might be an employee or two or five or 10.
So you’re, you’ve also got those trained people who know the customers. The customers know them, and so long as the employees are happy, they’re gonna continue to service the customers in a way that the customers will be happy. So you are buying that.
Yeah. And, but that’s the basics, right?
Joe Rojas: Yeah.
Hartland Ross: And in fact, many groups don’t have the basics. The customers aren’t on contracts. They’re serviced by some contract doors. They’re a lot of non-reoccurring revenue, project work, break-fix work, et cetera.
So the more you have of these things, the more problematic it becomes.
Joe Rojas: And they’re not to; I hate to keep going back to having systems in place and systematizing, but if you don’t have that right, what the business is person dependent. And then if when they get bought at the point that owner operator leaves or some of the lead technicians decide that they’re not gonna make the transition, you can lose those clients, and the value goes down instantly.
Especially if you’re doing an earn-out or doing some process where you still need to get cash upfront for the business. So the more the process you have in place, the easier the transition is for the client. For the actual clients themselves. They almost don’t feel it when it happens.
Remember when I sold my last company? We didn’t tell anybody for a year.
Jeff Loehr: Then you made the sale?
Joe Rojas: Yeah. Then we had made the sale, and then a year in, we said, oh, by the way, you know everybody that you know, because we just brought in all the people and kept operating.
And all the new technicians were in, and everybody knew everybody around. Oh, by the way, we’re changing our name to this now. Yeah. And we changed our name to a new company, and by that point, everybody knew everybody. Yeah, and it was done already. It’d been done for so long that nothing changed.
You can do it like that if you have the systems in place. If you don’t, you can’t. It’s impossible.
When Joe sold the MSP
Jeff Loehr: Joe, when you sold your business, did you work with someone like Harland? Did you have a broker or someone?
Joe Rojas: I did not. cause it the, see, I got you.
Jeff Loehr: Do you wish you did? So earlier, he was talking about how his business, you sold his business, and then somebody was on this, said, oh man, how much money did you get? And Joe said at the end, I ended up with $14,000. After he filed his debt and everything. So it’s one of those things where it does often make,
Joe Rojas: For my first one, where were you? Where were you in 2003?
Jeff Loehr: He was building websites on Microsoft Word, remember?
Hartland Ross: You’ve brought up a few points there, Joe. Certainly, businesses reliant on the owner are more problematic in selling. Everything will sell at the right price, but it will likely trigger an earnout structure, which is, Hey, as a buyer, I will pay you the seller.
If and when that customer pays right, As that revenue is realized, I will pay. So if they’re reliant on you, Joe, as the seller and you leave, which means the customer leaves at least as a buyer, I’m not stuck with paying you for a customer that’s no longer somebody I have in my book.
The earn-out solves that. But if you’re looking as a seller to say, I would prefer obviously to have some certainty to this process. You wanna get customers on contracts, remove yourself from that direct line of communication and I’m a big advocate of what you said, which is I guess call it rocking the boat.
Don’t rock the boat. There isn’t a reason to do a huge announcement in many of these cases. Sometimes there is. Yeah. Cause things are changing. And particularly, if everybody’s been phoning Joe, you as the seller, with your support by phoning your personal cell phone, that’s gotta change, right?
But you can say, look, things are changing. I’d like you to now call this number, and somebody else answers. And, oh, hey, I’m still around. I. And often, these acquisitions can be done where Joe, even if you sold the business, you just need to pop your head up occasionally to the customers to alleviate concerns that you might have gone.
And as you say, no, I’m still here. The reality is you’re not active in the business, and that was not the case. Yeah. And so, it provides people a little bit of reassurance. But the more you can transition everything over to your team and have it not relying on you, then you know the better it is from an evaluation perspective.
What’s the benefit of acquiring
Jeff Loehr: Now, we’ve talked a lot about the seller. What about the acquirer? What’s the benefit of acquiring?
Hartland Ross: So, the first biggest one is this kind of roll-up model, which is that the bigger the business, the bigger the book of business, the greater the value.
And everyone’s gonna say, duh, that’s obvious. But it’s more than that. It’s the bigger the business. Then, typically, the more profit it’s gonna generate, the more EBITDA it’s gonna generate, right? So if you’re making, for argument’s sake, 20%, then 20% of 10 million, obviously 20 is more than 20% of 1 million.
So it is gonna be a higher valuation. But the mere fact that you’re a larger business gives you that extra bump. So you get a double-whammy effect. You’ve got a larger multiple on top of a larger EBITDA figure. And so companies who can say if I’m a $5 million business and I add a $3 million book of business, now I become an $8 million book of business.
$8 million immediately will give me a lift. If I do that enough times, I can turn my million dollars into a $10 million book of business or $15. Then I sell out to private equity or somebody else who’s a $50 million MSP; then I’m gonna get a pretty substantial lift. So that’s the whole idea of doing these.
Jeff Loehr: The acquirers are growing and growing so that they get bought out eventually at a higher multiple to a bigger fish.
Hartland Ross: To a bigger fish. This is very much of a one plus one equals three. It really is; it’s your value at one plus another value of another.
$1 million business is not going to be two. It’s going to be, you know what, it would be at 3 million. So that’s the idea.
Jeff Loehr: That’s especially true at the small end because, yeah, there’s typically a lot of efficiencies that come at that early stage as you grow, right? One and one equals three, maybe, 10 and 20 equals 25. You can squeeze your assets more at that smaller stage, especially if you know what you’re doing. So if you’re acquiring and you’ve got the systems. You can really squeeze the assets for more value.
Hartland Ross: Go ahead, Joe.
Joe Rojas: When you have the systems in place, and you are the acquirer, you can choose who you’re gonna keep and what you’ll adopt from the other player. You can then turn your systems in, and the efficiency of that old company, of the company that you’re purchasing, goes up 40, 50, sometimes 200% or 300%.
The efficiency goes up so high that the gains your bottom line goes up from 20% to 30% because you’ve got the processes in place that they never had, and your purchasing power is bigger. So you can leverage your per-seat costs.
Hartland Ross: Absolutely.
Joe Rojas: You can leverage all your vendors. You can leverage everybody else in a way you couldn’t do as a smaller player. The bigger you get, the better your buying power is. The more you can leverage all those vendors that are charging you. Everybody’s got their hand in your pocket per seat, per month.
How do you squeeze those costs down a little bit? And that’s one way to do that.
Hartland Ross: Yeah, so I completely agree with that. I’ll also add that there are sort of these inflection points. The very small businesses often can be more profitable. Let’s say $500,000, $750,000 million MSP can be more profitable than a 2 million MSP because they’ve done away with a lot of things that, that $2 million MSP might start to now need to put into place. They might need an office that the smaller one didn’t need. And running a virtual team, where they may need someone to handle some HR; the legal issues might be more complicated.
They’ve got some additional overhead that will come with that larger business. But as you go through these points of inflection, so it’s greater profitability. And then we take a dip temporarily, and then we ramp up again, and then we take a bit of a dip and ramp up again.
So the overall point is absolutely true. And I thought, those much larger numbers, it really starts to pay dividends. But in those earlier days, many of them are scraping by with only a little extra resources.
Jeff Loehr: Cool. That sounds great.
Advice for MSPs
Jeff Loehr: Any advice to our MSPs who want to grow through acquisition or are desperate to get out?
Hartland Ross: I would say in terms of advice, if you are a seller, certainly understand the limitations of your current business, and look, we’re happy to have a conversation with you about that.
I’m sure that you can go through that also with your listeners, and in terms of the financials and operations, we don’t typically, we’re not providing coaching services and sitting there on a regular cadence to improve these processes.
But we can certainly point out some of the challenges. So improving those things, understanding your business is worth, and then looking at the exit strategy. A lot of times, MSPs run the business to maximize profit today. Yeah. For instance, they might say, look, I have none of my customers on contract cause I believe that customers should work with me because I want ’em to work with me, not because I’ve got them chained to a contract they can’t get out of.
So I don’t believe in contracts. That’s great as an operator cause you say these customers have been with me for 10 years, and they’re not going anywhere. But if you put yourself in the shoes of a buyer, the buyer’s gonna wanna see those contracts. Yeah. So if you plan to sell in for less than five years, don’t worry about it.
But when you plan to sell, you need to make sure that these things are short up, or you’re gonna pay a price in one way or another. Yeah. So that’s some advice as a seller and buyer; I think you need to become clear on what you’re looking for. And have a process.
You need to have screening questions. You need to be as much as the buyer, or you’re evaluating the seller, excuse me. The seller’s also evaluating buyers. It’s a competitive environment.
Joe Rojas: Yeah, especially now, it’s competitive with all the rollups and everything happening. Everybody thinks that their MSP, their $250,000 MSP, ‘s worth like 8 million, and you’re like, whoa.
Jeff Loehr: I do some angel investing and come across companies with zero revenue. They have a shadow of an idea and claim an 8 million valuation. So $250,000 in revenue sounds pretty good from that.
Hartland Ross: That’s true. An idea with very little revenue out the gates here, three to five at least.
Jeff Loehr: No, we’ll haggle over that depending on how much you need. But No, I think that’s great. So anybody interested in connecting with you, we will have you in the show notes your URL. It’s the hostbroker.com.
Hartland Ross: Correct.
Yeah. So their M&A division is the hostbroker.com. You can go there and register for our weekly mailing. It’s free to sign up, it goes out on Wednesdays, and you’ll get notified of new opportunities. If you also fill out what we call our wishlist: You tell us what you’re looking for, we’ll note it.
And if and when we have a match, we will also reach out to you proactively. Oh. That’s a backstop in case you, you missed an opportunity that’s published on our list.
Jeff Loehr: And that’s for businesses, right? You’re not a dating service.
Hartland Ross: We’re not dating, although part of the role that we hold is no question about it, a counselor, because it’s an emotional process. Selling your business, your baby, it is going on, and you know what is next for you. And oh my gosh, I’m gonna be stuck at home and drive each other nuts. Those are conversations to be had.
Jeff Loehr: It is, especially when discussing a million, $2 million business. You end up in marriage counseling, I’m sure. Now, listen, he’s going be home.
Joe Rojas: Take a deep breath.
Hartland Ross: You need to get another hobby.
Jeff Loehr: So be sure he gets a hobby, or he will drive you nuts. Yeah.
Hartland Ross: Oh, I’ve had that. I don’t usually speak with the spouse, but I hear it through the business owner that if I don’t do something, my wife will kill me. And it becomes an objection to them agreeing to getting a deal done cause if they don’t have a backup.
They sometimes won’t sell.
Joe Rojas: Now you have to tell a war story cause now you went down this road. Cause you said, I don’t usually talk to the spouse, but that means you have talked to the spouse.
And I wanna hear that story cause that’s a good story.
Husband and Wife MSP Team
Hartland Ross: Sometimes it’s a husband and wife team, actually. And good just selling the business together. But she’ll wanna make sure that the person’s got something lined up. So as part of the transition, the buyer may provide, if not longer term, at least short-term employment position for the seller to continue to be around and provide that support. If not, they might go and get another job, and in some cases, they might have started another business already or are about to start another business, and they need to free themselves up.
Joe Rojas: I know. But what we want is the war story. The one that’s making you smirk that one. It’s not that war story. You gotta tell me that war story cause that’s gonna be good.
Hartland Ross: I’m trying to figure out if there’s one that would really stand out here. We’ve got one person he offered to work at Home Depot as an interim solution. But-
Joe Rojas: she wanted him outta the house so bad?.
Jeff Loehr: So my wife would say you are not working at Home Depot. Because she would be sure that I would spend more money than I earned working at Home Depot.
Hartland Ross: That’s true.
Jeff Loehr: No. How many tools do you really need, Jeff? And I’d be like, no, but this drill, right?
Hartland Ross: I don’t have one like this.
Jeff Loehr: I don’t have the yellow one. I only have the red one.
Last piece of advice for MSPs
So the last piece of advice is, if you are going to sell, get a hobby and discuss this with your spouse.
Hartland Ross: So that would be, yeah. And I think one other thing that we haven’t talked about here, I’ll add, is understanding. Even if you’re not retiring, but particularly if you’re retiring, understanding what your business is worth vis-a-vis what you need to retire.
That’s a big friction point. If someone says I wanna sell, and then they find out that After it’s all said and done, like you mentioned Joe earlier, IRS takes their piece, and then there are legal costs and other things. And what you’re left with, is that sufficient for you?
And that calculation. That’s a discussion to have with your CPA. But what do you need? And you’re really working backward.
Jeff Loehr: Yeah. cause that 14,000 didn’t last you too long.
Joe Rojas: No, it did about three weeks. Yeah. It lasted three weeks, though. It wasn’t the nineties.
No, it’s still in New York, but it lasts me about three weeks.
Jeff Loehr: Hartland, it has been a pleasure. Thank you for your time. Thanks for hanging out.
I look forward to future conversations, and I hope we have a few people who venture over and check out what you are selling and what you’re doing over there.
Cause it sounds like an interesting thing both from, like I said, a growth perspective as, as well as an escape perspective. So thank you for your comments and your interesting way of being.
Hartland Ross: I appreciate it. Thanks, guys. And yeah, if anybody wants a conversation, feel free to reach out.
Happy to chat even if you feel like you’re just getting going on the journey and you wanna bounce some ideas happy to do
Jeff Loehr: then on that, Joe,
Joe Rojas: Remember that You Are Loved.
Jeff Loehr: See you next time.
