As scaling service based businesses, we want to succeed. We want our companies to thrive, to provide for our families, our employees, and to serve our communities in a greater way than we could have ever imagined. A big part of success is identifying what that end goal is, or what that will mean and look like for our lives when that day comes.
For many service companies, selling a business is the ultimate exit strategy. With the sale of a company, the small business legacy gets to live on. And business owners are not only able to make money off the businesses that they have built, but now they get to reinvest their time or reimagine their purpose in a brand new chapter.
However, selling a business is not something that you can decide today and do tomorrow. It takes strategic thought and planning. Prospective buyers and business brokers look at things like financial health and profitability, streamlined operations, strong sales and marketing, a solid management team, and so much more.
In fact, even if selling isn’t on your radar in the short term, You can implement best practices in your company today to make your company more valuable later on. I am so excited to introduce a long time friend and client of mine for many, many years who has so much experience in this space.
Brandon Kirk is the owner of an award winning air duct cleaning company in Colorado Springs called Planet Duct. He is a former defense contractor and holds a bachelor’s degree in project management. Brandon is an entrepreneur, mentor, author, business coach, and speaker who was named 2021 Small Business Person of the Year. Planet Duct has won the 2023 Better Business Bureau Summit Award and was a finalist for the 2024 Social Impact Business of the Year.
Basically, Brandon has consistently made waves in the business community, and it has been such an honor to know him, to learn from him, and just witness the impact that he creates for other entrepreneurs in his space.
Scaling Your Business
Now, we’re excited to welcome him on the podcast to learn more about how you can scale and eventually sell your service-based business!
Brandon: Thank you. I’m glad to be on your podcast and talk about building, scaling, and how to sell a company. I’ve done it a couple of times and it’s intense, but with planning, you can have a really, really good exit.
Madeleine: Yeah. Talk to me about your business journey. What does that portfolio look like for you and what has been your experience buying and selling companies?
Brandon: I’ve had several companies. I had Colorado Handgun Safety here in town at a Firearms Training Company. My brother now runs that. So, basically we were partners in that and I said, you know, I’m too busy – you run this. So, he’s handling that. I’ve owned two different carpet cleaning companies here in town, and I’ve sold both of those. And then now, obviously in the AirDuck space, I’m building and scaling and then eventually looking to sell it. I think what people need to understand is when you’re starting a business from day one, you need to be thinking about your exit strategy, not working five, ten, twenty years and going, “Oh, I guess now I better think about selling or passing on this business.”
You really should be thinking from day one, what is my exit strategy? Cause you’re working toward that.
Madeleine: Yeah, absolutely. I think it can really influence the choices that you make when you have that end goal in mind. It changes how you do business today, because if your plan is just to let the business go forever as long as you pour into it versus, “Okay, I want to be able to profit off this business. I want to make sure that it provides for me long after I want to continue doing it.” It changes the way you build your operations and how you scale your organization.
Selling or Succession: You Need A Business Plan
Brandon: With the two different carpet cleaning companies, figuring out, “Okay, what do I want to do?”
Do I want to build these and sell them? Do I want to pass them on to my family, have my son take over? But that’s really important. You have to have their buy in on this because you could build something. And we’ve seen it multiple times with other companies, the parents have built up this wonderful company.
They want to pass it on to their kids and none of them want it. They’re like, we’ve seen all the struggles you’ve gone through all these years to build this thing – we don’t want any part of that. And when I was getting ready to sell my last carpet cleaning company, I talked to my son. I said, “If I got out of this business, would you want to stay in the industry?”
Would you want to take over this business? And he said, “No, no way.” He goes, “I can’t handle the type of stress that you can handle. And I’m just not going to be gifted in that space.” And I was like, “Okay.” That right there told me, I need to stop thinking about building this thing to pass on to my family.
I need to build this to sell to somebody else so that I can benefit my family with the proceeds of the sale, as opposed to raising him up, teaching him all the stuff that I know, grooming him for management, and all of that stuff. When I’m looking to sell, I don’t need to do all that.
So it would be a waste of time and energy to put my effort in that direction when I’m ultimately just going to sell the company off.
Madeleine: Yeah. To be able to get that clarity earlier on and have that to know that you can have those conversations with your kids and be able to prepare them and prepare yourselves. I’m sure that’s really, really helpful.
How to Evaluate Company Value
So what was that decision like when you had that realization that you knew you had to sell instead, what were some steps that you took? What were some action items that you did to be able to transition your exit strategy to pass this business on to another buyer?
Brandon: At that point, I mean, it totally changed the focus about how we were building. And it’s like, “Okay, we need to have all of our systems in place. Our process is documented. We need to bring in some other people to look at the financials. Because I already had a number in my head.
But then I had to bring in a CFO, Robert Phelan, a great guy, to outsource CFO. I had him look at my finances. He coordinated with my accountant and when he came up with the valuation goes, “Okay, what you’re asking for falls within the range of what your company is worth.”
You can do the same thing with a broker. They’re probably going to take a bit more. They’re going to want a percentage when you go to sell. But, once we have the valuation, then it is part of making sure that your financials look great.
Find Out Where Your Team Stands Before You Sell
Next, it’s important that your processes are good, your team understands where the company is going, and what is going to happen.
Because, you could be like, “Oh, I’m selling the company.” And then all of a sudden your workers go, “Whoa, Hey, if you’re not going to be here – I’m leaving, and going to go do something else.” So, you have to figure out who’s going to go with the company, making sure all the assets are documented.
Because you can’t say, “Well, you’re going to go work for this guy now.” They could say, “No, I’m not, I don’t like that guy. I don’t even know him. When you’ve built a relationship for years you know if people are buying into that vision, and if they are that’s a problem.
Madeleine: How do you have those conversations with your, with your staff? How early on do you let them know? What does that transition period look like?
Brandon: Well, once I started looking at, “Hey, I’m looking at selling this.” I just got the whole team together and said, “Hey, here’s where we’re at. This is what I’m looking at doing.”
And I was very, very open about it. In fact, my current staff with this company, they’ve known since they started, “Hey, I’m building this thing and I’m building it to eventually walk away, and sell this off to some somebody else. And then, I’m going off and doing my next thing.”
Don’t Become Your Brand
I’m not just going to sit on a beach because I get bored after a week. I know so many entrepreneurs who love entrepreneurship and what they do. They love serving, idea generation, and things like that. Just retiring to do nothing is such a pipe dream; you get bored very quickly. Like, no, I need to get busy!
So, you’ll find things to do: you’ll either start another business, serve on different boards, or help other companies because you need to have purpose. If you suddenly go, “Okay, my purpose was this; my purpose is now gone,” what do you have left? How are you going to continue to move forward?
You’re not. You’re not just going to sit on your couch and watch TV during your retirement years because that’s no fun. So, when you’re looking at starting a business or owning a business, the first thing I think about is: how are you going to brand this thing?
And what I tell people is: don’t name the company after yourself. Do not become your brand. You should enhance the brand, but don’t become the brand. For example, if it’s “Joe’s Carpet Cleaning,” what happens when Joe’s not there anymore? Joe was the whole brand behind it.
You were selling Joe. So, I tell people, “Hey, Nick, name it something that isn’t centered around you. You are not the focal point; you are not the brand, because when you retire, you can’t sell yourself.”
Build A Business That Works Without You
Madeleine: Yeah, that is so important. It’s something good to keep in mind whether or not you want to sell, but just being able to remove yourself from the business.
I think that’s a really powerful transition point when companies start to scale. If they have created an entire business identity around themselves, it’s really hard to step away. It’s really hard to take a vacation. It’s really hard to get sick and depend on other people to run your company for you.
If you have embedded yourself so much in your company—from its operations to its brand—that’s a dangerous place to be. It does not necessarily mean that it will be an appealing purchase for a buyer, especially if the business owner has built up the entire business on their shoulders.
Brandon: Yeah. They built it up on their shoulders and haven’t developed their team to handle the things that you don’t have time for. In my business, I do not have time to go out often and jump in the middle of an air duct cleaning job. I mean, I will if I have to, but it’s not the best use of my time as a CEO. Any new CEO coming in is not going to want to go out in the field and get up in somebody’s 200-degree attic to work on this system in the middle of summer.
They might not be down for that. Most will have thought, “Oh, I’m going to come in and just run operations and marketing and all that.” And that’s really what they should be doing, especially on the marketing side—not being out in the field turning wrenches.
I say it everywhere I go: you cannot work on your business when you’re working in your business. Building up your team to handle that stuff, learning how to delegate—which can be very hard for people, especially if they’re control freaks who need to be in control of everything instead of trusting their teams—is crucial.
You need to be able to hand over not only all your business assets but your team to the new buyer, so they’re not having to work in the business when they need to be working on it.
Allowing Your Team To Fail, Will Help Them Succeed
Madeleine: So, let’s say that business owners are in that scaling stage where they’re really trying to define their roles as CEOs. They’re trying to build up the system and their team, like you were talking about. What are some steps they can take when they’re in that “nice messy middle” place to prepare themselves for scaling and selling?
Brandon: First thing is to adjust their mindset. You are not a carpet cleaner. You’re not a plumber. You’re not an HVAC guy. You’re not an air duct guy. You are the CEO, and you need to have that in your mindset. You should be thinking, “What is the best use of my time?” From the beginning, ask yourself what is the best use of your team’s time and see who in the business you can raise up, develop, and groom to take on more responsibility. Learn to let go of trying to control everything.
What we’ve discovered is that you might try to jump into the business to stop people from making mistakes. The problem here is that if you don’t let people make mistakes, they cannot learn because you’re always rescuing them. It’s interesting—let’s see what he does here. Yep, that’s exactly what I thought would happen. Now he knows not to do that again and will handle it better next time, obviously with exceptions for areas of health and safety.
You have to let people make some mistakes so they can learn. How you respond is crucial. It’s not a problem or a disciplinary issue; it’s a learning opportunity. It’s a coaching moment. That’s a significant aspect of the mindset you need when grooming your people. You’ve got to let them make mistakes.
This gives them the opportunity to grow and really challenge themselves. The more you help them level up, the less you’ll have to do in the future. You’re empowering them to create a culture where people are allowed to experiment, learn, and grow. This way, you can focus on what’s most important to you and what will really move the needle for your company, knowing that day-to-day operations will be fine. You’re teaching them problem-solving skills, like how to handle an unhappy customer or fix a broken system.
People can start to think for themselves, come up with solutions, and handle issues because they’ve learned the skills through experience. Micromanaging them prevents that growth. Micromanagement and punishment stifle learning, whereas coaching and teaching facilitate it. I had to learn this myself—I wasn’t always a good boss. I’ve learned these things over time, and now I let my team grow and make mistakes. This builds their confidence and problem-solving abilities.
One issue today is the current labor market. People are entering the job market with a significant skill deficit—both mechanical and soft skills. Some don’t know how to use a computer properly or are afraid to touch it. They also lack basic soft skills, like talking to people or networking. They’re often on their phones all the time and haven’t learned essential interpersonal skills, such as a firm handshake, eye contact, and effective communication. Their initial interactions can be quite awkward. We need to give them space to develop in these areas.
Madeleine: What was that turning point for you in helping people delegate and grow on their own? How has that contributed to your ability to sell your businesses in the future?
Leave Behind A Healthy Work Environment
Brandon: Well, there have been a few turning points. One was realizing that trying to run multiple businesses at the same time was just overwhelming. I was like, “I can’t keep running multiple businesses.” I knew I had to take things off my plate, concentrate on one thing, and do it well. So, I decided to sell off the carpet cleaning division. We did that, and now I can focus full-time on this, which has been a big improvement.
Another issue is that if you have personal problems or trauma that you haven’t dealt with, you need to address it because it will manifest in your business. I started going to counseling and got on medication, which has made a massive difference in my business and my marriage. The workplace used to be very high-stress; I used to yell, throw things, and freak out over stuff. Now, I’m honestly very chill about mistakes or things breaking. We’ve transformed our company culture, with significant help from Frank Sinclair, who helped us reimagine the culture. Changing that culture has made it a much lower-stress place to work. Our team has responded well, stepping up and wanting to do more because they feel it’s a safe place to grow.
Madeleine: That’s amazing. Congratulations on what you’ve achieved. Culture is no easy task, especially when transforming it from one thing into something else. I’m excited for you to have made that transition and to see the positive impact on your team.
Brandon: Yeah, it’s been a great change for me, my marriage, my business, and my staff. People now feel comfortable telling me about issues, like, “Hey, this rotary cable broke. We need to fix it.” It’s not a big deal anymore.
Previously, when something broke, people were afraid to admit it because they didn’t want to be yelled at. As business owners, especially if we’re control freaks, we can be our own worst enemies. We might poison our own well if we don’t manage our emotions and egos effectively.
You Need Business Systems And Processes
Madeleine: That’s powerful. So, talk to me about the importance of people and systems in establishing a solid operation. What is your advice to business owners who are starting this process and thinking about selling? How should they approach systems? What kind of things do they need to put in place today?
Brandon: Systems are crucial. First and foremost, make sure you have a really good CRM to manage your client database and follow-ups. Another essential is an employee handbook, of course, and an operations manual. Many businesses have daily operations, but often, these processes are just how things have always been done. Nobody has written them down or explained why they are done a certain way. It’s important to document everything so that when you go to sell, your business is essentially in a box with everything neatly arranged.
Having all your processes documented is like putting a little bow on top before handing it over to the new owner. Also, ensure all your OSHA compliance is in place, including OSHA 300 logs and other necessary documentation, so the new owner has everything they need to step in smoothly.
Part of the planning process is understanding that franchises are popular because they come with all of this documentation and structure. If you’re starting from scratch, you need to build this yourself. This can be particularly challenging if you dislike writing or creating content.
In that regard, AI can be a huge help. For example, you can use AI to generate policies or policy manuals on various topics. This is a significant time saver and can streamline the documentation process. Utilizing AI in these areas can save you even more time.
Buyers Are Less Interested In Your Business Revenue And More Focused On Your Personal Income
Madeleine: You mentioned earlier the importance of working with fractional CFOs and business brokers. Could you elaborate on that process and what kind of financial health preparation is necessary to ensure that your books are clean and your margins are solid? What does financial preparation look like?
Brandon: Financial preparation is crucial. First and foremost, make sure you have a reliable accountant. I’ve learned the hard way that you should work only with a CPA or an enrolled agent. These professionals are accountable to the state if your books aren’t accurate. Anyone can claim to be an accountant after taking a few classes online, but they’re not accountable to anyone, which can lead to issues like cooking the books or embezzlement if you’re not careful.
So, having a good CPA team to handle your financials is essential. Working with a fractional CFO can also be extremely beneficial. I currently work with one, and we review our numbers weekly. Previously, I’d look at my financials every six months, then quarterly. Now, we review them weekly to forecast where we are. If we see a dip, we investigate the cause and determine what we can do to address it.
Having this regular financial review and getting help from a fractional CFO or a regular CFO is huge because, as business owners, we might not have the time or expertise to fully understand our financials. A CFO can break down the balance sheet and run reports, providing clarity on where your financials stand and where they’re projected to be. This is particularly important when selling your business. Buyers are less interested in your revenue and more focused on your personal income. They want to see your personal taxes, W-2 income, and K-1s. They’ll want to know, “You’re generating $1.4 million a year, but what’s your actual take-home? If I buy this, what will my return be?” High revenue doesn’t necessarily equate to high profitability.
Madeleine: Oh man, that’s going to hurt a lot of people’s hearts.
Brandon: Yes, it will. Many business owners sacrifice their own pay for the sake of growing their business, but when it comes time to sell, they need to ensure they’re compensating themselves properly. It’s a good reminder that it’s important to pay yourself and build your business to support you.
This was a tough lesson for me. It seemed counterintuitive, but you have to pay yourself first. I used to think, “We’ve got money, we’ll pay the bills, and if there’s anything left, I’ll get a paycheck.” But if you’re looking to sell, you need to shift that mindset. Your CEO salary needs to be a priority. There were times when I had to take out a home equity line of credit to make payroll, or weeks when the staff got paid, but I didn’t. That’s the struggle of entrepreneurship—lean times are inevitable, and sometimes they happen because of mistakes you need to learn from.
Madeleine: I completely understand and relate. This is actually the first year, the first year and a half, that I’ve been consistently paying myself. I always had the mentality that I loved my business so much I could do it for free. I was passionate about it and enjoyed supporting my team, even if it meant sacrificing my paycheck. But in 2022, during Christmastime, I realized I couldn’t even afford to buy my daughter Christmas presents because every dollar was going straight to payroll and expenses. That made me question the point of what I was doing. Sacrificing for the business was one thing, but sacrificing for my family was unacceptable. If I had started with the mindset of paying myself first, things might have been different.
How To Negotiate A Business Deal
Madeleine: So, talk to me about the negotiation process. What does it look like, and how do you ensure that you truly get what you want? How do you set those expectations and hopefully make a really good sale for yourself?
Brandon: First of all, make sure your company’s financials are in order. Work with your CFO to build up an evaluation. We created a packet containing all the financials and details about our assets. We put together a sales packet, and I knew exactly who I wanted to show it to.
We worked with my attorney to draft a sales contract that we could fill in with the amounts and specifics. It was a great contract, and the other party should have read it more carefully. I was pretty pleased with that. We also made sure to have NDAs (non-disclosure agreements) in place. If I’m showing my business to someone, I don’t want them sharing the details with others.
In fact, we had one individual who violated the NDA. Out of the eight people I showed the business to, I immediately called him up and said, “You’re out of the running. You will never have a piece of my company. You violated the NDA on the very first day you signed it.” I refused to sell to him.
I had someone else, whom I had mentioned years before, who I said would get the first look if I decided to sell. So, I gave him the packet, and he signed the NDA. He took it back to his team, including his accountant, CFO, wife, and management team, to review and decide if it made sense for them to buy the business.
There are also details you might not initially consider, such as leases and subscriptions. For example, we sold six or seven vehicles with the company, all equipped with dash cams and GPS through a Verizon subscription. The contract for those services needed to be transferred to the buyer. If they were taking over the physical assets, they also had to assume responsibility for the digital assets and any associated liabilities.
Negotiations can be intense. Even though I had known the buyer for about ten years—having met him at a class in Denver—we still had heated arguments about the sale. We’d go back and forth, discussing every detail and making sure the contract was clear. It was pretty intense, but in the end, I got the asking price I wanted, and he got what he needed. The company has since been successfully integrated into his operations. So, if you’re going to negotiate, try to stay a little calmer than I did.
What Makes A Successful Handover For Your Small Business?
Madeleine: Thanks for your takeaway. Oh, that’s so funny. So, what does the handoff process look like? Say you’re under contract and moving forward with due diligence—what does it look like on your end to prepare your company, and how do you help make that transition?
Brandon: We kind of wrote into the contract that ownership would transfer on a specific day, with everything getting transferred over to the new owner on that day. There was going to be some overlap, of course. For me, it was a couple of weeks. There were times when we realized, “Oh, hey, we forgot to give them this,” and had to take it over to their office.
The handoff process was pretty smooth. The best part was meeting with their team, as he already had a team in place because he was in a similar line of work. We explained why we did things the way we did and how we set up our systems. This also involved handing over all the passwords—Twitter, Facebook, Instagram, our websites, and so on—so they could start their own marketing efforts.
The handoff process is not just about signing papers and being done. There’s going to be overlap. As part of the handoff, I agreed to stay on their board of directors for two years. They could call me anytime with questions. If they needed to discuss something, I’d drive over, and we’d have a meeting. I’d explain why we did things a certain way and discuss any potential pitfalls or contingencies they should consider if they chose a different route.
One significant aspect is making sure your team understands the changes that will or won’t occur. For example, in one of my sales, we were told that everything would stay the same and nothing would change. However, after the sale, the employees’ paychecks changed from weekly to bi-weekly. Dealing with Gen Zs and millennials, who are not always great at managing money, a weekly paycheck can be crucial. They might spend their money quickly and need that regular income to avoid financial strain.
When employees suddenly find their pay schedule has changed, it can create problems. Some were okay with the transition, but the moment their paycheck changed, they decided to leave. I had warned that changing things could cause issues, and it did. New owners will have their own ideas and expectations, but they might realize that certain aspects of the previous system were actually effective.
Madeleine: Oh, man. Yeah, I’m sure that transition is hard. I like the philosophy of transparency and inviting employees in on the ultimate vision, as we discussed earlier. Sharing the plan, where the company is going, and what to expect can make things a lot easier compared to just selling the company and surprising employees with a new owner. It feels like setting everyone up for failure.
Brandon: It does. That’s bad business and borderline unethical. People invest in helping you build your company, and then you’re not upfront about where it’s going or what will happen in the future. Transparency is crucial. If you’re hesitant to be transparent, it often points to deeper issues—like fear. Making fear-based decisions in business usually leads to the wrong outcomes.
Start Business Exit Planning Today
Madeleine: So if you were to start another company tomorrow, what would you do? With all that you’ve learned and all the businesses you’ve been able to grow and sell, what would be your action plan?
Brandon: My action plan would be to find a business where, once it’s set up, I can be an absentee owner and have passive income.
So that I only work when I want to. The problem with a service-based business is that it’s hard to be an absentee owner. My next step is to buy land and build storage sheds, so I have 300 rent checks coming in every month. That way, it won’t matter where I live—I could be here, in Florida, or even Israel. I’ll just fly in every quarter to check things out.
Madeleine: Well, I’m so excited for you. I think it can be hard for a lot of passionate small business owners, especially in the service-based space, to start thinking about that exit strategy and being able to get out of their business.
I see a lot of businesses that start off that way, and they don’t plan for an exit. They just love what they do and continue to do it day in and day out. Then something happens—they get sick, or they have to stop working, or they end up closing their business. Or they plan to pass it on to their kids, but the kids don’t want it.
So, what do you tell those people who are in love with their companies? How soon do they need to start thinking about that plan? And what does that mean for their passion, their heart, their love of their business? How would you talk to them about that?
Brandon: I’d say the main thing is that your exit strategy needs to be considered from day one.
Get your team in place—your accountant, your CFO, your attorney. Those are the three things you’ve got to have in business. I love my attorney; other people fear my attorney, which is great.
Have your team in place and start thinking about your exit strategy early. While you love your business, you need to make it so attractive that someone else will fall in love with it enough to write a big check. Then it comes down to negotiating.
Do you want a lump sum and to walk away? Do you want a decent-sized check and then royalties thereafter? Or do you want to stay on the board for a set period to provide oversight and guidance for the new owners?
Figure out how you want to set it up, and then make your business so attractive that someone else definitely wants it. I have people who say, “I want your business.” I reply, “Alright, drop $4 million on my desk, and we’ll talk.”
You need to have a number in mind—what do you think your company is worth? If your company isn’t worth what you think it is, a CFO or business broker will tell you. They’ll say, “Honestly, your company isn’t worth what you think it is.” So, what do you need to improve or change to get your company to that point? That should be your goal.
Business Coach And Mentoring With Brandon
Madeleine: I love that. Thank you so much for sharing your experience and the real-life situations and scenarios you’ve gone through.
I’m so glad we got to discuss exit strategies and how to really scale your business to sell it at the end of the day. Thank you for your time, Brandon.
How can people get a hold of you?
Brandon: It’s pretty easy. We’re at https://planetduct.com/ (you know that because Succeeding Small managed all my SEO and websites).
We’re also on Facebook and YouTube. I have a great YouTube channel. You can call us at 719-728-5111. We’re happy to discuss anything people need. 📍
Madeleine: And you mentioned in your bio that you’re a business coach and mentor. What does that look like?
Brandon: I meet with people who are starting up companies. We sit down, and I review everything from their digital assets to other aspects of their business. I give them homework, outlining tasks that are fast and free but will help propel their business forward.
I also refer them to resources like Succeeding Small, good accountants, or attorneys if needed. I help them get connected with people in the industry who can support their business the best. This way, they don’t have to start from scratch or make costly mistakes, like building a free website with a cheap tool like Wix, where no one will ever find their site.
Basically, I provide a comprehensive plan and referrals to other professionals who can help them build their business because we can’t do it alone.
Madeleine: Awesome. Thank you so much, Brandon. I appreciate your time and am excited to share this valuable information with so many people who need to hear it.
Until Next Time,
Keep Succeeding Small!
