Evan Poling on Fixing the Broken Business Buying and Selling Industry- Why 80% of Businesses Never Sell

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This is the Beyond the Story podcast, a show that goes way beyond the story. And now, Sebastian Rusk Evan, welcome to the show. Hey, thanks for having me. Hey, thanks for taking time out of your day to hang out with me for just a few minutes. I really appreciate it.

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I know that We connected over on the internet, specifically on a great platform called Podmatch. So shout out to Alex and his team for building something great and connecting other podcasters together. On this show, I love to tell people's stories. I love to back up for context purposes, back up to the beginning of the story to help our listeners better understand exactly where the beginning of your story was. Now, the beginning is always different for everyone else. So whatever the beginning is for you, but let's back up real quick, help our listeners better understand Where you got started and Yeah, no, it's a it's a great question and there's a lot of power in storytelling. So for me particular as a young kid, you know, I worked with my father. He was building a business and He was one of those entrepreneurs that would work on a business for a little bit and then get a little bit bored of it would stop working and then you kind of fire up another venture and get excited about that and you have some success and then some failure and so i would see him. You know he had a tattoo shop a gun store he had like a pet exotic pet store so Kind of like a gun show that he did for a little while so you can't doing these little ventures over time and so you know as a ten year old twelve year old watching him build his business is a success i was really intrigued about business building fast forward to about a few years ago i was working in a corporate job remote work Not really i'm feeling like i was really being utilized and so one of the things i started thinking about was is that my wife was having some issues with work. And i was thinking you know she's really great at what she does and i think if we were to buy a business for her. Put her in a business i could run the business side of things she could run the actual business delivery of the services. I mean, this could be a great, great thing, you know, and so, uh, started on the journey of buying a business and looking at businesses for sale. And so where did I start at the same place that, you know, 90% of business buyers start as bizbuysell.com and, um, started talking to business brokers, which. For the audience, if you're unfamiliar with what a business broker is, it's someone who's kind of like a real estate agent for businesses. And one of the things that they do is they, they help facilitate the connection between buyer and seller. There are a lot of buyers on the market right now that will kind of waste the time of business owners. And so sometimes brokers are a great asset and finding that.

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But one of the things that I was really struggling with was we were really serious buyers ready to pull the trigger, ready to go. But by the time we got the information, the package for those businesses, We were able to ask a few questions and get some answers back to us. It was about six weeks after. And so I said to myself, like this, this is crazy. Like why would anybody go through a process of talking to a middleman? Um, why would they wait six weeks just to have a handful of questions answered?

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It just seemed really inefficient and effective and.

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So I had to start racking my brain. What, what are the things that make a business broker a good asset to have and what are some downsides? And I started thinking about online marketplaces, places people buy and sell businesses. And, um, so I created a company that really takes all the pros of all of these solutions and then eliminates a lot of the cons. And so, um, that's really how my, my journey started a little bit of background about it And let's talk a little bit about that. What exactly do you do today and, and, Yeah, absolutely. So today, um, I like to say that I connect business owners directly to business buyers. And the reason I think that's really important is because, um, 80% of businesses that go to market never sell. And these are businesses that are profitable. These are businesses that, um, you know, have sometimes employees are making money, but 80% of businesses that go to market never sell. And so I know that there was a, there was a flaw with how we were doing it and we had to fix it. Um, and so. What I'm doing now is, so there, there are marketplaces out there, right? So let me, let me talk a little bit about the solutions that are currently out there. One of them is a marketplace. So there are big, big marketplaces out there that allow people to create a free buyer account and then contact the, a, the broker or contact the seller. And now these platforms are typically generated towards or skewed towards the business broker. And so 90% of their customers that are paying that platform or the business broker are really not the business owner. They're not someone looking to sell their business. And so those platforms really only care about the business broker. And so what ends up happening, these buyers are talking to the business brokers. They're not able to really have that connection with the sellers. And a lot of these platforms, they have like 250,000 buyer accounts. And so one of the problem is, is like, you're not really ever going to talk to an owner. You know, you've got a one out of 250,000 shot to, to really get that communication in and having a conversation with, with the business owner or broker. And so, um, really inefficient. Um, So the online platform is really not a great solution. I feel like, and then alternately the business broker, they take anywhere from five to 20% commissions on the sale of the business. And so. Yeah.

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So what ends up happening is, is if only 20% of businesses actually sell, then the four other businesses. So the one that does sell has to pay for the loss for the four other businesses that didn't sell. So that they pay what I call failure tax.

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And so, um, so what I do is I actually don't charge commissions. I don't charge fees and I connect owners directly to buyers. The difference is buyers actually pay to view the, to contact the business owners on my platform. And so what this means is buyers are not serious, don't actually, um, get access to owners and the buyers that are not serious, won't waste the owner's time. So it's a win for the owners. And if buyers are actually committing money to the process, you know, that they're more serious, they're serious buyers. And so what ends up happening is they kind of weed themselves out the bad buyers. And then I'm only, they're only really left with good buyers and sellers. And then I can connect the two directly to one another. And so. Um, everyone really wins. Buyers get off market business deal flow. Um, and they get to actually talk directly with the owners. The owners get to see what kind of person the buyer is. Do they fit the culture of the company and the community they work for? Do they have the skills needed to run and operate the business? And so that my platform is a little different than that. And are you facilitating the actual, the sale of the company? No, I'm, I'm, I'm hands off the way that I, The way I look at it, because if an owner saving anywhere from 10 to 20% commissions, the goal is that they would take 5% of that, like 5% commission. Uh, they're going to hire a lawyer. They're going to hire an accountant. They're going to hire maybe even hire a business broker. Like, Hey, business broker, I need to learn how to read an LOI, an IOI. I need to. Help me walk through due diligence i need you to help me close the business and so all of those things i mentioned might only be ten hours of actual work and so if you're hiring a business broker at two hundred an hour. I mean you're only paying two thousand dollars versus paying them fifty grand hundred grand hundred fifty grand and so.

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Then owners aren't really paying for what they need versus what they don't need.

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And so, um, I feel like that's, that's a better way. And so then my, my platform is a connection point. So not only do I connect buyers and sellers together, but I connect advisors to both. So a lot of times buyers will need advisors to help them walk through the purchase of their first business. Sometimes they need help, um, you know, getting financing and then for owners, they need kind of some of those professionals I had mentioned earlier. And so. Um, it's really a connection point for all the people.

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Okay. So, and then, so, so people are paying to So everyone can create a free account. Um, but the, for the sellers, the sellers are free as well for the listing. So it's kind of like a marketplace kind of like BBS. Um, but if, if they're working with an advisor, if they're not working with advisor, they have to pay a small fee. Um, and then likewise, buyers can see the listings for free, but in order to actually send their contact information to the Cool. So, um, so that's the, that's the core of the business on there is being able to run the platform, manage the platform, peep some one, one user pays, the other one doesn't, but the goal is for Yeah, absolutely. Absolutely. Cool. And I really go ahead. I was gonna say, I feel like, so one of the things, you know, you had mentioned like story behind the story. And one of the things I was noticing with within Facebook, I think if for any business owners that listen to this, this episode or this podcast, one of the things you have to ask yourself, is there already a marketplace trying to solve this problem that exists? And so, for example, if you go on Facebook and you see all these groups, there's groups where people are trying to buy and sell businesses where there's a hundred thousand plus members. And so, you know, there's five, 10 groups like this with a hundred plus thousand plus members. And so what it tells me is that there is no real good connection point out there on the marketplace, solving this problem that people want solved.

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And so, um, that was a real good indicator to me that my business was exactly what a lot of people wanted. Yeah.

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Oh, absolutely. So, and how long you guys been doing this? Uh, we're almost, we're at the two year mark actually. Yeah. What's been the hardest part? Oh yeah. Um, so in most businesses you have one service or product you offer to somebody. So you might have like a cup that you're selling to like a customer. The problem is, is that with, with marketplace, not only do I have to go get the sellers, Um, the sellers have to be populated first and the listings have to be populated first in order for the buyers to be interested. And so, but then the sellers don't want to list because you have no buyers. And so it's kind of this like vicious cycle, like no one wants to do business with. So like, well, once you get more buyers, all this on your platform and then the buyer's like, well, once you get more sellers, I'll, I'll become a member on your platform. And so that has been extremely difficult getting, um. getting a place like that started, it is very tough. Because like I said, it's twice the amount of customers and maybe like 10 times the difficulty. And what's been the best part? Um, the best part is, is that everyone's loved the concept. Um, owners are like, wow, you mean I don't have to pay anything to sell my business? Like, you know, I'm already paying taxes, lawyers, accountants, brokers, and all these other fees. And you know, like 50% of my money is gone and then I got to pay another 10 or 20% commission. You mean I don't have to pay that extra 10 or 20% commission? Business owners love that. Um, buyers are like, you mean I don't have to spend a thousand hours looking for off market business? per sale deals, like you have businesses that are nowhere else that are only on your platform that are off market. Um, and so they don't have to spend, you know, thousand hours at 15 bucks an hour. I mean, that's 15 grand, you know, and they pay a fraction of that for on my platform. And then even business brokers, like your idea is great. And I've had a business broker tell me, um, many business brokers actually tell me that my business, business will actually put out. Business brokers out of business that are bad business brokers, like mediocre to bad business brokers will be put out of Uh, man, it's tough. It's tough. Yeah. Just a lot of cold calling.

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Um, you know, they're on the Facebook marketplace platform. I was just reaching out to business owners that are listing their business for sale. And what was ended up happening was, is a similar thing to like a big marketplace.

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They were listing their business on this Facebook marketplace and they would get a hundred thousand people messaging them like, Hey, I want to like send me your financials. And like, but none of these buyers actually had any money. They weren't actually ready I know. And. I mean, they don't, but they don't want to pay the commissions and a lot of these businesses are so small.

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Right. And so, um, crazy statistic, I'm a little tangent here, but, um, 91% of businesses are a million dollars in revenue and under. And about 90% of services for businesses are for $1 million in EBITDA or higher. And so there's a mismatch of people providing services for these small businesses. And there's reasons for that. Um, you know, these businesses are hard to sell. They're hard to work with. Some of these owners are difficult and things like that. But, um, yeah, so like they were really trying to put their business on this platform and it wasn't really working. And so, um, reaching out there, you know, social media, doing a lot of social media stuff. Do you have a podcast? I do not Yeah, I mean, unless you enjoy cold calling. I mean, I'd rather wake up in the morning, punch myself in the face and eat my pillow than ever make a phone call. But, you know, you can invite business owners that should be on your platform onto your podcast, do something for them first, and then sign them up for your platform. I know, I mean, I've lived that for the past 15 years, I've done it. And that's what our agency does, helping people do it. Not a sales pitch by any stretch of the imagination, but when you mentioned cold call, that's a trigger word for me. So I No, I think a podcast is an excellent idea, adding the value.

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You know, a lot of my target audience is boomers. And so I think they would fall into Because you're leading with doing something for them first, instead So it's, let me do something for you and be like, Hey, I don't know if you knew or not, but here's what I do. And you're a business owner. If you didn't think about selling or buying a business, you need to be on the platform. It's an absolute no brainer. Let me give you a quick demo of you're open to it and let's get you on the platform. And I think you would be just like shooting fish in a barrel, like whacking baby Yeah. I mean the, the, the beautiful thing about cold calling is at least Yeah i did but it is because in there like you know hey i don't know so tell me what are your objections how can i make my service better. Yeah, absolutely.

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And so that's, sorry about that. That makes it a lot better, especially when you're a startup company and you're trying to fill out the market.

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You know, businesses have been bought and sold to business brokers for over 250 years.

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And so there's, there's actual newspaper clippings from like the 17, 1800s where, you know, they're listing businesses for sale. And so this model hasn't really changed much. There has been no innovation and uniqueness. I mean, we have, we do have platforms, but those platforms still employ the business broker model. Either they have business brokers directly or they have some kind of commission, like, Hey, we'll help you sell your business, but you have to pay us, you know, a percentage of your company that you built for the last 40 years. And it's like, I'm hoping to sell the business. Why do I get 10% of your company for helping you sell something? Like it doesn't, it just doesn't feel right, I guess, you know, so. I'm Okay. I do as well too. Well, man, it's been great to, uh, to meet you and get to know more about you and tell your story a little bit about what you got going on.

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Clearly a service and product that the marketplace needs on Yeah, I would say if you're a business owner, if you're just starting or you're about ready to exit, I would say always plan towards your exit. Make your business, your business, think of it as a product that you're going to sell. And so make it as sellable as possible. And the earlier you Yeah, absolutely. Well, those are great final thoughts. Evan, thanks again for your time, my brother. I appreciate it. Friends, I'll put all of his contact info in the show notes. You'll be able to connect with him further. Check out his platform. If you're a business owner looking to buy or sell a business, looks like this is a platform you need to explore. So make sure you go and do all of that. Until next time, friends. Thanks so much for tuning into this episode of the Beyond the Story podcast. We sure do appreciate it.

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