VIEWS Digital Marketing Consultant Mary Stewart recently interviewed Tennessee Business Brokers’ Managing Director Karen Schorkopf. Karen is based in Tennessee and works with business owners who are looking to sell their businesses and with individuals who are seeking to buy a business. She shared some tips for those in both situations. She also shared some of the changes that have taken place over the last year. Read the entire transcript below or watch the video.
MS: Hi I’m Mary Stewart from VIEWS Digital Marketing. We’re a full-service digital marketing company helping companies who want to grow and define their online presence market themselves effectively. And today I’m talking with business owner Karen Schorkopf.
Karen is the Managing Director of Tennessee Business Brokers which is a boutique business brokerage and M&A firm based in Brentwood, Tennessee. The firm serves Tennessee and surrounding states helping clients who are trying to buy or sell a business. Thank you for joining us today Karen.
Can you tell us a little bit more about what you do for your clients?
KS: Absolutely and good morning to everyone. We help business owners of privately owned businesses sell their companies. So, what we really do most of our customers are retiring and moving into their sunset years and we help them smoothly exit into a retirement position. So privately owned businesses.
MS: Okay and so do you have any particular industry focus? Or would you say that?
KS: We do not have any particular industry focus. The folks on my team are experienced. They come from long backgrounds having been bankers, business owners themselves, analysts, accounting backgrounds.
So, we really help all business owners in all industries. What we do have a little bit of a focus though is, ideally, we’re looking for motivated sellers. People that are looking to retire or sell their business in the next couple of years and then we, call it in our industry “lower middle market” or small businesses, so that could be a small business like a restaurant or a retail store, but it could also be a 3 to 30 million dollar manufacturing plant and so that is kind of our sweet spot. A little bit bigger than that and they’re probably going to need some other services.
The other thing we really focus on is middle Tennessee. We’re located here in Tennessee and so we focus a lot geographically. Helping business owners in this market and then we look to the surrounding states as well. Ideally, we want somebody who’s been in business for seven to ten years that usually they have a better track record and it’s an easier transition in the short term.
MS: Gotcha well how do people find you? How do people find Tennessee Business Brokers?
KS: That’s a really good question. Again, all of the folks on my team, we’ve been around for a long time, so the majority of our business comes from referrals. So, a business owner typically has a team that they work with. It could be their banker, it could be their accountant, it could be their attorney. This time of year, it’s a lot of accountants working on their taxes. But most of our business comes from referrals from their contacts.
Next to that we have a lot of very satisfied clients and so we will get people that have just sold their business. I had this happen a couple of times last year and then after the sale when people started to find out about the sale they said “Oh, who did you use?”
And so, we get also happy sellers. And then people like you. You guys are instrumental in helping us. We’re all good at what we do. I’m good at selling businesses. I am not an expert in digital marketing so I do rely on my website. Keeping it up to date making sure that it pops, making sure that it’s getting a lot of you know a lot of views and things of that nature. So again, I surround myself with a lot of experts as well to have people find us.
MS: Oh, that’s great thank you. So, you spoke a little bit about it, but what is the typical profile or a profile of a typical buyer who wants to buy or invest in a business?
KS: Yeah, the buyers are a really wide range and so we have amassed a number of buyers on the larger scale businesses. We work with a lot of private equity groups that are looking to make investments and those folks come from all over the country. They’re not specific to Tennessee.
In addition, we work with corporations. They may be looking to add on to their current business. So, a big manufacturing plant might want to add on another regional plant and again those will come from all over the United States.
Aside from that we have some investors, but we also have a lot of individuals. So, when it’s an individual looking to buy a business the typical profile of that individual is somebody who’s had a lot of experience already in business.
KS: Not necessarily owning their own, but it’s very likely that they work in corporate America and in corporate America they may have done financial work, sales, service, operations, systems. A lot of them are just tired of working for somebody else and Covid has really underscored that.
MS: Oh, my goodness.
KS: Wondering where they’re going. They’ve been outside the box working from home and going “What do I want to do with the next 10 to 20 years of my life?”
So, a lot of our individual buyers will be in the range of somebody in their 40s to 60s. I mean it’s not exclusively that, but we find a lot of buyers in that pool. Now again one of the things that we do is we screen all our buyers so they’re also going to all be very financially sound. A lot of them have saved up adequate cash reserves, they’ve built into their 401k plans. Some of them that have inherited some money from deceased parents or maybe they’ve got a severance package from their job.
But these are the folks that are really looking to do something else, and they want to do it for themselves, make a change.
MS: Okay. Well so you said that with Covid things have-It’s prompted some people to make some changes. How else would you say that the events of 2020 have impacted your business? Have you seen a larger number – Obviously you have seen larger numbers looking to buy?
MS: How to sell
KS: Yeah, that’s a really good question. So Covid impacted our business in that I would say things came to a standstill for about two months. Like I think a lot of people did. Some of the deals we had pending went on pause. You know there had been a material adverse change in the world as we know it.
But really in our industry things came back live and very active in May so the events of Covid did not change our industry that much. But a couple of changes they did make to Tennessee which is where our market is again that are very important for business owners out there looking to sell is that the banks have become very user-friendly in terms of lending. Interest rates are at an all-time low, okay, and they’re holding down I think a little bit because of the economy worldwide and locally and then the other huge plus I cannot underscore this enough is that we’ve got buyers we’ve got people.
We’ve got corporations and we have buyers that are looking for businesses in Tennessee from out of state. So, for a seller that’s looking to settle in and around Tennessee we have people flocking here from California, Nevada, Chicago, the northeast, the east coast. So again, Covid is a help to a certain extent because the demand for businesses here is very high right now so in the long run it’s really just helped our business.
And last year by the way we saw a huge growth in our business. It was the highest year we’ve ever had, so business was good. That’s not to say that some of the smaller restaurants and things that are struggling are having an easy time, because a lot of those folks are struggling. But we’ve been able to get many of those across the finish line as well so.
MS: That’s great and congratulations. Actually, I know you’ve recently made a change with your business and added some new brokers to your firm. Do you want to talk a little bit about that? Is that because of the increase?
KS: Well, it was multiple fold. I tend to stay in touch with a lot of good people and it is partly due to the increase in the growth in the business in general. Again, business is growing, there’s a lot of people retiring. I’m at the tail end of the baby boomers and so there’s like 10 to 20 years of people that are a bit older than I am that are really looking to retire so that’s going on but I’m super excited.
I can only tell people to go look at our website. I’ve added some really great guys. When I say their names, I feel like I’m sounding off the Beatles’ names. You know Jim, John, Paul. But they’re good guys they’re all– yeah it sounds like the Beatles, right? But they’re all just fantastic guys.
We are not the largest firm in Tennessee, but we are the best. And I can honestly say that proudly. We come from a lot of experience we can handle all kinds of transactions. We close a really high percentage and you know before we alluded to it a little bit ..you surround yourself with good people so business owners do that and I do that and these guys are just the best. I mean that is the differentiator for our company, is the brokers on our team. So yeah, thanks for asking.
MS: Yeah, that’s great and congratulations. So how should a business owner, which, kind of shifting gear, how should a business owner prepare for selling a business and when is the best time to do that, for them to do that?
KS: Yeah, so this is something people hear me say all the time and maybe it comes from my years of having been a banker and working in that industry, but the best time for any business owner to start thinking about an exit strategy is when they write their business plan, their very first business plan.
KS: You should always be thinking about what your plans are even if it’s 5 years 10,15, 20, because if you’re always in that mindset to build the best business ever you’re going to have an exit strategy, whatever that looks like but that’s in the ideal world, nobody ever does that. They get swamped and covered up and they’re growing their business and they’re very tied up. So, what I tell people is, especially our referral partners, our CPAs, and our bankers that are very close to the business owners: “I would love an introduction a year to two years ahead of when somebody’s really looking to sell their business.”
If they know that it’s coming up it’s really a good time to make an introduction to a business broker because we can do a pricing analysis and give them some tips and pointers that they can actually incorporate prior to putting their business on a market. It can really optimize the value that they get and make the transition a lot smoother So yeah, I think it’s great when we can be added to their group of, team that are helping them with that strategy at the end.
MS: Okay and do you think, does it seem like those business owners do know? I mean when they’re, when they come to you to look to sell do, they think “Well two years from now is when I’m-or three years whatever-that I’m getting to a point where I want to sell my business” do you see them?
KS: Yeah, I think they’re always curious to know what the price range is and sometimes that exercise alone will tell them “I’m not ready. I could keep working here for a couple more years and take some more cash out of the business.”
But one of the points of having that kind of interview or discussion with them is that businesses don’t sell overnight. It’s not like real estate where you put it out on the market, and it gets scooped up right away. We have to align just the right buyer with that seller. Somebody who’s gonna fit with the employees, the customers, you know, the industry. And so, a typical cycle for once you put a business you know, out on the market for it to even go under contract that can take six months to a year and then when it’s under contract it takes about 90 days to close and then after it closes there’s usually a transition period where the current owner is training and transitioning the new owner.
So, if you think about that life cycle, when I say one to two years ahead of time, it’s very reasonable because there’s the time to get ready, the process of being under contract, and then the owner needs to plan for a transition. So again, it’s not to say that something doesn’t go on the market and sell three or four months later. That happens–it’s always leveraging when it does, but it’s more likely it’s a little bit longer cycles so getting on board ahead of time is a good idea.
MS: All right, well that’s good to know. I wouldn’t have known that it was that long of a process but. So, with these buyers what would you say is the biggest or most common mistake that buyers of new businesses make, or buyers of any business?
KS: Yeah, that’s an easy one to answer. They, the buyers that we have are always super excited right? If they’ve decided this is, when they can imagine themselves in the business, they get very excited. combined with the fact that they have a lot of ideas about how they want to improve or grow the business –that’s always the case because we bring really great buyers to the table. I love that about that but the biggest mistake I would say that some of them make is trying to make changes too soon once they get in the saddle. Right? You don’t really want to mix up employees, you don’t want to change your payment models or do a lot initially, so that can happen on occasion and my thoughts on that are always “Hey you take the first year to get your legs under you to get to know your people, which are always your biggest asset, to get to know your clients, to get to know the processes. If you don’t take full advantage of that training and transition from the seller it’s–I won’t say it’s lost, but it’s a really opportune time to just focus on doing what’s been done in the past. So again..
MS: I guess that coming in and making major changes is stressful for the employees that are still with you.
MS: Makes for uncertainty.
MS: So, what piece of advice could you give to every business owner for 2021?
KS: Yeah, I think, you know on the one hand, I think we’ve all learned a lot from 2020 and Covid. And so, I think all business owners, a good piece of advice would be to just look at your life, keep it in balance.
You know think about your one, three, five-year plan, whether it be your family plan or your business plan, give it some thought. You know, how do you want to handle it, where do you want to go from here.
And then from a business owner from the business side of it, you know my biggest advice is always surround yourself with a great team. You know whatever you’re doing, whether you’re growing, you’re stepping sideways, you’re slowing down, you’re, you know, delegating more, but surround yourself with digital marketing companies like you guys. Like don’t try to do that, if you’re not good at that, let somebody else do it like you guys do for me. Or you know CPAs, or you know other marketing people, but surround yourself with a good team don’t try to do it all yourself.
MS: Yeah, that’s that is very good advice. Stay with what you know and be surrounded with the people who can help you with the other parts. Well, so what do you like best? What do you like most about being a business broker?
KS: Well, I always say I have the best job ever and it’s absolutely the truth. I mean first of all it’s not a job, it’s not a work for me. If you love what you do it’s not work, and I love what I do. I mean every day is different. I love getting together with small business owners. I love that first couple of appointments while I learn about how they started their business in the basement of a house or whatever that looked like, and then the challenges, the frustrations, the opportunities that they’ve experienced, and you know one of the things– I’m very patriotic person–but one of the things I love is I am working with people that are the American dream. You know I mean they are. I almost get choked up about it sometimes when I come out of those meetings because what they’ve done is so awesome and they don’t come–they come from all backgrounds–they’re people in the country, they’re people that have business backgrounds, they’re just –and they’re, again it’s every industry so I literally say I have got the best job in the world and I enjoy it. I look forward to getting up and connecting every single day.
MS: Oh well maybe that will be your answer to my next question, but you’ve said that you guys are the best, and I agree with that, but what do you attribute your personal success?
KS: Yeah, well I attribute it a lot of times to my being a little a bit gutsy and so from a very young gal I was for some reason just not afraid to take chances and so I’ve always pushed myself to go to the next level oftentimes getting into positions that I had no business being in and then I just figured it out. But honestly, I will attribute that maybe to the grace of God because a lot of times I made moves and changes that were maybe outside of my wheelhouse, if you will, and I don’t think I would have taken that if I hadn’t had, you know, opportunities, challenges. And sometimes things didn’t go well for me and you learn from that too but at the end of the day I feel like I’ve been given great opportunities throughout my life and I give that up to the grace of God.
MS: That’s wonderful. Well and that’s true. And also, though taking that step to move out of your comfort zone and take those opportunities or chances, that’s really admirable, and you’re I’m sure you’re right that’s a large part of your success. So, thank you.
KS: Yeah, and then yeah, I was going to say again it’s just surrounding yourself with good people. I mean nobody does anything great on their own. It’s always a function of leaning on others for their expertise, so always surround yourself with good people and I can’t thank you and Maryn and your team for all you guys have done for me. It has helped me tremendously and I could not do what you guys do for me, so thank you so much.
MS: Thank you. We love working with you. We love what we do as well so thank you. Appreciate that and thank you for taking-I appreciate you taking the time to talk with us today and let people have some more information. I’ve put the website up on the page on this screen so if you have any questions for Karen or for us about this then reach out to the website or give her a call. And thank you so much. Have a great day.
KS: Thank you. Bye everybody!
MS: Bye bye.
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