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2020 In Review & 2021 Outlook
Joe Valley is the Co-owner and Director of Brokerage Services at Quiet Light Brokerage, a business advisory firm that helps online entrepreneurs achieve amazing exits. Joe joined the firm after selling his own e-commerce business through Quiet Light Brokerage in 2010. He has advisor expertise in all web-based niches, including SaaS, e-commerce, and content businesses.
In addition to being a frequent speaker and podcast guest himself, Joe is also the co-host of the Quiet Light Podcast.
Mark Daoust is the Founder, President, and CEO of Quiet Light Brokerage. Since starting Quiet Light Brokerage in 2007, Mark has guided dozens of entrepreneurs and small business owners through their exits.
Before his work at Quiet Light Brokerage, Mark founded Site-Reference.com, an online publication with a subscriber base that he expanded to more than 220,000 members. Now, Mark is a well-known presenter and guest author, as well as the co-host of the Quiet Light Podcast.
Here’s a glimpse of what you’ll learn:
- Joe Valley and Mark Daoust recall how entrepreneurs and small businesses took a hit in 2020 as a result of COVID-19
- How will Quiet Light Brokerage be closing out 2020 in terms of revenue?
- Mark and Joe discuss Quiet Light’s mutually beneficial referral program
- Some of the biggest deals Quiet Light has closed in 2020
- How Quiet Light Brokerage initially reacted—and eventually adjusted—to COVID-19
- Mark and Joe predict what 2021 will hold for business owners, Amazon sellers, individual investors, and others
- Quiet Light’s in-depth course about business valuation
- Mark and Joe’s hopes and goals for 2021—and why they are thankful for the challenges of 2020
In this episode…
Regardless of whether you’re a business owner, Amazon seller, individual investor, or consumer, essentially every single person in the world can agree on this one statement: 2020 was a difficult year.
However, 2020 is now, finally, coming to a close—which means it’s time to reflect on the challenges and trends and construct a hopeful plan for 2021. With the new year quickly approaching, many entrepreneurs and business owners are scrambling to identify and implement effective strategies to grow their businesses in 2021. Thankfully, Mark Daoust and Joe Valley are here to share their goals for 2021 and illustrate how you can find tangible ways to improve your growth prospects right now.
In this episode of the Quiet Light Podcast, co-hosts Mark Daoust and Joe Valley sit down to discuss the ups and downs of 2020 and share their goals for Quiet Light Brokerage in 2021. Listen in as Mark and Joe talk about their end-of-year growth strategies, the unmatched value of referral partners, and the lessons they’ve learned and will carry into the new year. Stay tuned for more—and happy holidays!
Resources Mentioned in this episode
- Mark Daoust
- Joe Valley
- Quiet Light Brokerage
- Quiet Light Podcast on iTunes
- Quiet Light Podcast email: [email protected]
- Quiet Light’s Online Courses
- Quiet Light’s Free Valuation
- Walker Deibel
- Chris Guthrie
- David Newell
- Pat Yates
- “How To Build, Value, and Sell A SaaS Business for 6, 7 or 8 Figures” by David Newell
Sponsor for this episode…
This episode is brought to you by Quiet Light Brokerage, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light Brokerage wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.
If you’re new to the prospect of buying and selling, Quiet Light Brokerage is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
Not sure what your business is really worth? No worries. Quiet Light Brokerage offers a free valuation and marketplace-ready assessment on their website, quietlight.com. That’s right—this quick, easy, and free valuation has no strings attached. Knowing the true value of your business has never been easier!
What are you waiting for? Quiet Light Brokerage is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Hi, folks, it’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.
Mark Daoust 0:27
Hey, Joe, the year is almost over, 2020 is almost over. And I know that for a lot of people, obviously, it’s an expected thing for me to say this, but it’s a good thing that the year is over, I think we can say, as much as you can say, General common for the entire world, much of the world has had a difficult 2020. Obviously, it’d be good for us to kind of do a recap as to what happened in the world of online business and acquisitions, what we saw from where we sit, which is unique perspective, because we can watch us so many other business owners and how their businesses have gone, and also have a little bit of a look out to 2021. And what to expect there. I’ll just start off with a really general comment to say, I know 2020 was rough for a lot of people on a lot of fronts, but for online business. There were some there were some highlights.
Joe Valley 1:16
Oh, without question. Now there was some lowlights we, we both have friends and clients that suffered in 2020. They thought they were going to have an incredible exit, and they had to pull back and hold off perhaps until 2021. But overall, look, it started out with a bang, right, first quarter was pretty amazing, a great start. And then COVID hit and we pulled back, buyers pulled back, sellers pulled back SBA deals, took a little bit longer to close. And there was a little bit of fear there where people were hoarding cash holding on and not sure what decision to make. And then it sort of changed and started pick up steam again. Based upon the numbers so far this year. Now this is airing. December 29. Which by the way is my birthday. Happy birthday to my future self
Mark Daoust 2:06
a happy birthday present yourself. I’m gonna forget you know that.
Joe Valley 2:10
Well, you just wished me happy birthday, everybody that’s listening today. Go to Facebook and send me birthday wishes, please.
Mark Daoust 2:16
Hey, you know what you I think people need to get you a really nice Christmas slash birthday gift.
Joe Valley 2:21
I agree. What do you suggest?
Mark Daoust 2:23
I think they should rate the podcast.
Joe Valley 2:26
I think they should rate the podcast too.
Mark Daoust 2:28
Wouldn’t that be wonderful? Like an awesome gift?
Joe Valley 2:30
Let’s get let’s get 20 new podcast reviews on December 29. Let’s shoot for folks, please rate the podcast. I’ll send you a personal thank you note. I’d appreciate it. Awesome. Now where the heck was I?
Mark Daoust 2:42
What was that we were talking 2020 2020 bad things, good things. Then you mentioned your birthday and we got distracted. totally distracted, it’s easy to get distracted.
Joe Valley 2:52
Yeah, so there was a lot of fear, but it got back on track. Now. You know, closing at the end of the year predicting out another 16 days to the end of the year from when we’re recording this will we as a company, be flat be up or be down in total transaction, transaction value close compared to 2019,
Mark Daoust 3:11
we are going to be up and by a lot. It’s a weird year. Right. So all the way up. Again, we’re recording this on December 15. And I’ve been watching the numbers here in December. If we track our year over year transactions, both in terms of volume and in dollar amount, up until today, literally today, December 15. We’ve been trailing last year, both in terms of our revenue, and also in terms of the total volume of transactions. I think I’ve looked at it today. And we’re like $40,000 short of where we were this time last year. Our anticipation though, based on what’s scheduled to close in the next two weeks, just with our company alone, is that we’re going to beat last year by a lot by around 40%, potentially as much as 40% of last year’s revenue. So again, just to put this in perspective, we’re going to go from being even with last year, essentially even beating it by 40%, assuming what we have scheduled to close closes. So on a year where it’s been, you know, our business by its very nature is lumpy. And for those listening, I know this is a little bit of inside baseball. But the world of brokerage is a lot of peaks and valleys. If you took a look at our revenue on just a monthly basis, you would see some really staggering months and then some months that are really kind of, you know, not revenue rich at all. It’s just the nature of having closings with large commissions on them. So it’s not unusual for us to have these sort of wild swings from one month to the next but this year, this year has been a little bit different. We definitely had a law right around the time that a lot of people had law as everybody was trying to figure this world out. And then towards the fourth quarter boy did it pick up picked up in a hurry.
Joe Valley 4:56
Yeah, and the last the last two weeks of the year are going to make it an enormous difference for us. But oddly enough, I’m looking at our 2018 to 19 growth. And it’s about the same about that 40% year over year growth. What’s interesting, and for those that don’t know, that we do this, is that our referral revenue, we pay referrals to folks that refer us, it’s, we don’t advertise it, it’s just somebody send an email introduction. And if they become a client, we do pay a referral fee. Those are up 13% overall, from 2019. So thank you to everyone that is speaking so highly and referring clients to us whether your previous client, owner of a mastermind group or whatever it might be, we appreciate that.
Mark Daoust 5:42
I want to actually just piggyback on that it’s up 13%, in terms of the number of people that we paid out referral fee, so the number of percentage of deals, yeah, dollar wise, I’m gonna throw the zoom or take a guess, what is the increase in the referral fees that we paid out this year, total dollars, totally just in percentage,
Joe Valley 6:03
I have to do some quick math, because I’m looking at the close sales report over here on my monitor,
Mark Daoust 6:07
you know, rather than make people wait 73% increase, and referral fees that we’ve paid out to people for the referrals, again, we really appreciate these referrals, these are awesome, that they, they’re not only about the clients, it’s about the trust that we know that that you’re imparted upon us, and also the people that that are trusting you with a recommendation. So we do appreciate it beyond just the business side of it. But yeah, the referral fee, what we’re paying out is significant. And these, these can be as little as a few $100. I think our biggest referral fee this year was upwards of $40,000 for a single referral. And I know some of the referral fees that we paid out this year, or on a larger transaction where people who refer to deal I think to me two years ago or three years ago, they got paid out last summer, and then they got paid out again this summer. Now a fairly significant sum of money. So a nice deal for them one email introduction, and they got two years of pretty significant income.
Joe Valley 7:05
It’s a beautiful thing for everybody involved, I’ve got a deal closing on the 17th. So two days, and that was a referral deal. And the person that referred it is going to get a nice Christmas bonus of about $25,000 or so. And it was a referral that came in. I want to say, almost two years ago, it was a business that we were going to list but the numbers just weren’t quite strong enough. And the advice to the client was maybe you should wait if you really want to hit your goal weight. And we’ve gone from a goal of I think it was 2.1 million two years ago for an exit, and we ended up exiting closer to 3.5. So it was good to wait. And it’s good, good referral fee all around.
Mark Daoust 7:51
So I haven’t told you this job. But wow, you know, recently we hired a CFO for Quiet Light. It’s something that I’m a big advocate now, for our clients. And for people listening to this, if you have a business that’s doing over a million dollars in revenue, I highly recommend hiring a CFO, it’s one of the better investments you’ll make. And the CFO, we track all of our referrals within our CRM. So we have everything tagged in there to make sure that when something closes, because it can be a while from that time you make that email introduction to when that person is actually ready to go to market to win, the deal actually closes it can take a year or more, in some cases for that to close. And oftentimes people forget that they made an introduction. Well, we actually had a deal that closed in June. And it was the source of referral and everything was tracked properly. But I dropped the ball when I was handing out the payments. And I didn’t send the person I know right. And I didn’t send the person, their money. They didn’t even know about it. Because it was an instruction that happened a while ago, but because we have these multiple checks in place, our CFO came back to us and said, Hey, I’m not finding this referral fee. And sure enough, he was right. And so imagine the surprise for the person who made that referral when I sent him an email the other day and said, Hey, I want to send you $13,900 can you send me your wire information? By the way, this is for the referral that you made over to me a while ago, it did close. I apologize for the delay. Obviously super appreciative. He didn’t have to bug me about it. I love making those payments. Like there’s it’s weird to say that I like paying people money, but for referral fees. It’s It’s fun. I enjoy it because it makes people say and we’ve done that a number of times where somebody didn’t know that there was even a referral program. But if you’re listening that that’s something that we do haven’t and can be an easy way to make a little bit of money.
Joe Valley 9:34
2020 was a year where our deal sizes varied more than any other year. You know, I’m looking over at the close Sales Report. I think our smallest deal was around 16,000 Yeah, just about $16,000 in 2020 whereas 2019 it was closer to $30,000. You want to talk about some of the larger deals and where some of our advisors are moving in turn. Besides
Mark Daoust 10:00
transaction size, we have to be a little careful with this. Because obviously, you know, until the deal closes, it’s certainly not a guaranteed sort of event. But with two transactions, we have two transactions right now, where the combined value would be over 45 million for those transactions. We’ve been playing around much more in this space, over the course of the last 18 months where we’ve closed a figure transaction, we’ve we’ve been talking to clients anywhere from the range of, you know, 12, 13 million now upwards of having serious conversations with groups in the 60, 70 $80 million dollar range. where, you know, what we’re exploring this, we’re taking a look to see, does this who we want to become as a brokerage? And if so, how do we do this in a way that’s really effective? We do have some advisors on the team who want to specialize a lot more in this space. Now. It for those listening, you might wonder, Well, why wouldn’t you want to be in a space? Why wouldn’t you I mean, a $20 million deal sounds like be worth a lot more than than a million dollar deal. But Joe, I know you’re one person on the team here. And you’re not alone, we have a number of people on the team who are looking at this band of different deal sizes and saying, You know what? Working between one and $10 million. Sounds really, really nice. Why is that?
Joe Valley 11:18
Yeah, you know, it’s funny, I was talking to someone that graduated from Wharton Business School the other day, and very, very successful. And when the entrepreneurial route, whereas many of his colleagues went the CEO route of publicly traded companies, he said, I can’t hang with those guys. If I’m going to have a beer, I want to hang with the entrepreneur, I want to, to work with that bootstrap, small business person, and that’s who I enjoy hanging out with. And it not that a business that is going to sell for $25 million is operated by somebody that is more highbrow and not my people necessarily, but strangely enough, I I enjoyed the the impact that a smaller transaction, let’s call it sub 5 million will have on somebody. And it’s a strange thing on somebody’s life, because it turns much quicker. So, you know, you and I, I think make great partners for two different reasons. One, because you always take a long term view of things, and you’re incredibly detailed and want to get it perfect. I balanced that out by going ready fire aim, often. And because of my approach, I like transactions that are actionable they take form quickly, we move through listing LSI, closing fairly quickly, a 10 $20 million deal is going to take six months or so. And I’m not used to that I think our average time from letter of intent, from listing to closing in 2020 is about 125 days, that’s up a little bit because of COVID. That’s kind of my sweet spot. And I’m gonna stick to it. And I love the fact as you said that we have some advisors that have said, raise their hands and said, I love this space, I want to focus on that space. And so we’ve got a good balance of advisors now including myself and you, we have a total of 12. We added two in 2020, right, and two in 2019. So we’re you know, we’re growing and we may continue to grow slowly with advisors Mark, and I will do less and less advising and brokering ourselves as some of the other team members step up and take on more and more of those transactions.
Mark Daoust 13:44
Yeah, this is a point that I find interesting in a space, right, because I know some of the other companies in our space have, they’ve grown very, very quickly. And I’ve even used it within some of the marketing. We are the largest team in this space, right? Join the largest team that out there for advising, but we’ve intentionally grown at a slower rate, when I talk to sellers and even buyers, probably more so buyers, I tried to express that will never be the highest volume brokerage out there. It’s just not going to happen. The way that we’re set up, we’re not going to be able to take on that much deal flow and nor do we want to. And secondly, we’re never going to have the largest team as well. And I think one of the reasons that that we’ve been hesitant to bring on additional people is trying to get that culture right. Culture is such an important thing for Quiet Light. And I also think for the experience of the buyers and the sellers that are out there because of the culture of the company and us that are acting as the intermediary is wrong or toxic or sending up this attitude of greediness or just trying to churn businesses. It has an impact downstream on the clients and the people that are actually doing the transacting. So it has been a year of growth. We have added some team members and It’s been an interesting experience, especially, you know, as the founder of the company to look at how can we retain the culture that we’ve had, you know, since you came on Joe, since Jason and Amanda was really just the four of us for a while there, you know, Diane helping out and the way that she’s helped out, and how can we retain that sort of core culture that we were able to build up back then? And literally triple the size of this team? With some amazing personalities, some amazing people? We have an Emmy nominated advisor on the team now, right. I mean, he helped us I mean,
Joe Valley 15:33
Mark Daoust 15:34
Yeah, right. I it’s been a few minutes and you’ll hear about it.
Joe Valley 15:40
It’s impressive. No question. We’re talking about Walker here. Folks. Walker is a best selling author, he is going to hit 30,000 copies of this book sold this month. And he was just nominated for an Emmy, which is amazing for a documentary that he produced right was the name documentary, something that’s called Wrestle.
Mark Daoust 15:59
Wrestle. You can find it on Amazon. I haven’t watched it yet. I watched the the trailer, a few of his documentaries. And we’re getting a little off the the path here. But I highly recommend if you want to see two of Walker’s documentaries that he’s done. I’ve watched both of these and they are fantastic Print the Legend would be number one, and it’s a great documentary for anyone who just enjoys business and wants to see that startup game, turn into a VC game. It’s a fascinating documentary. The second one is Finders Keepers, I guarantee you will love Finders Keepers and you’ll refer to all of your friends. Because it is just that good of a documentary. It’s might be one of my all time favorite documentaries. So that’s my movie recommendation.
Joe Valley 16:39
I’m gonna have to listen to this podcast and write those down. But you have to repeat them now. I haven’t watched any of them. Gosh,
Mark Daoust 16:45
watch watch Finders Keepers,
Joe Valley 16:47
I talked to him every day, I do take him the time at night to watch his his his documentaries, I guess I can figure it out. He
Mark Daoust 16:55
doesn’t show up in them.
Joe Valley 16:56
So you don’t have to I know that’s true. Um, in terms of the team, and the culture, we’ve added, it’s interesting this year versus last year 2020 versus 2019. In 2019, we added two amazing entrepreneurs, David Newell and Chris Guthrie that have more SaaS experience combined than I think the rest of the team combined. And it’s such a welcome addition to the team. And David wrote a SaaS guide that you guys can find on our website about exiting your business and when a SaaS business and when it flips from a multiple of discretionary earnings to a multiple of revenue, which I found fascinating. And it’s actually going to be part of a plug, part of my upcoming book, which we’ll talk about it in 2021. It’ll launch in April. Chris is a legend. I didn’t know he was a legend until he was on the team. And every time I talked to somebody, that’s an influencer. They’re like, you’ve got Guthrie. latine You’re kidding me. That’s an amazing addition. He’s a legend. And it’s stunning. How many people know him from back when he was podcasting? And helping people launch their businesses and, and grow them? In 2019? That was the two additions in 2020. We added Why? Yeah, we don’t want we don’t call him Chris because his name is Chris was niak. He’s just was to us. Who has been a brick and mortar business broker and online entrepreneur, a buyer’s broker comes to the table with credentials up the wazoo.
Mark Daoust 18:34
And Wazoo. Yeah, yeah, that’s a little pun.
Joe Valley 18:37
I’m gonna have to look it is look at that. I didn’t get that. Wow. Okay. Thank you. So sorry. No, that’s good. Another another tangent. And then Oh, my goodness. Pat Yates just joined the team but like a month ago, and Pat is he’s a shark tank alumni did a deal with Robert and owns buy Happyfeet.com which we all have at home now. Did you get your slippers
Mark Daoust 19:01
I finally got my slippers. It’s like pillows on your feet.
Joe Valley 19:04
They’re saying everybody buy Happy Feet there. They’re incredible. Pat went and put the Quiet Light logo all over them and said everybody on the team slippers for their entire family had to had to finance his house and refinance it in order to send Mark enough slippers because he’s got
Mark Daoust 19:22
children. For all the kids. He won’t actually work. Let’s make a promise. For the first five people who actually leave a rating on our podcast, we’ll send you a pair of Quiet Light. Happy Feet slippers. If you really don’t want the Quiet Light logo on them, then what we’ll find something else for you with that, that sounds fair. Right
Joe Valley 19:40
on promised. Yeah,
Mark Daoust 19:41
they’re awesome. They’re really they really are good.
Joe Valley 19:44
I’m gonna I’m gonna look at the total reviews. We have the morning of the 29th and then the evening of the 29th in all those additions the first five we’ll get some Happy Feet slippers.
Mark Daoust 19:55
You have to leave a review because otherwise we don’t know who it was. That’s right. Joe, let’s let’s, let’s pivot real quick to a topic that I’m sure everybody is sick of. So I don’t want to spend a whole lot of time on it. And that is the the topic of the pandemic of we’re doing a look back on 2020, we need to take a little bit of time to address, you know, the elephant in the 2020 room, which, which was the pandemic, obviously, you know, March was kind of when everything hit the fan, and we were all trying to gauge I’ll tell you my big regret, with a pandemic. And that was shortly after everything shut down, and the market crashed. There was a lot of questions as to what is going to happen. We had a big internal discussion here as to what was going on? And should we publish a piece? Should we write something about what’s going to happen next? And I remember saying very clearly, I don’t want to be peering into a crystal ball and trying to predict what’s going to happen. Well, we ended up doing just that. And we ended up writing a long blog post as a collaborative piece where we asked everybody what they were seeing. And for the most part, a conclusion at the time was, we think it’s going to be business as usual. So the reason that I regret it is because I think we were actually right long term. And we can see that in our numbers this year, we’re going to be up about 40%, year over year, so when things close as scheduled. So that’s actually, you know, good news, where we were wrong is the short term, sort of Outlook, when we wrote that blog piece, what was pretty funny as everything was actually kicking long in a pretty decent rate. But it wasn’t until about a week after or two weeks after that, we did lose a couple of deals or a couple of deals had to go on hold and and waited for the pandemic to just kind of settle out we had sellers, sellers were backing out for a couple of reasons, a few were hit by the pandemic in a negative way, or inventory inventory outages from from China, whereas a lot of others and this this is probably more of what I’ve seen, we’re really trying to adjust to the bump that they were having and trying to figure out, what do I do with this? I know that my valuation my company’s on the trailing 12 months basis, but the last month alone is about the same as by 12 months previous or you know, some crazy, huge numbers, how does this factor into my valuation? So let’s just pump the brakes on selling. Let’s try and see what happens. So this is kind of led to us. If you take a look at just the volume of deals that we did. There’s definitely a noticeable dip in April. And then may we started recover in June, we definitely recovered quite a bit as well. So there was this, there was a short term dip that we weren’t really expecting, but not in a bad way, necessarily.
Joe Valley 22:34
Yeah, yeah. I want to address that. And also talk about there’s been a slight dip in our average deal size that may change again before the end of the year. But it’s because every time we bring on new advisors, it’s a little bit of a dip. What I what I don’t want people listening to think is that we’re only focused on those eight figure deals, because our average deal size is just under a million dollars, it will pop up to probably close to 1.5 or so. But again, largest going to be in the eight figure range, starting with the two lowest, just really small, under 17,000. As far as what we did, and what we had to do with regard to COVID. bumps was art. It wasn’t science, we used as much math and logic as possible. But we had to look at everything from a buyer’s point of view. You know, I had a listing in particular where it had a COVID bump, and we looked at the, you know, the trailing 12, and then the prior trailing 12. And it had been growing consistently at about 25% year over year, and then it had a 75% bump. And so we kind of made an adjustment down in our own math, we didn’t adjust the p&l, but we made our adjustment down and said okay, well if it was a non COVID bump year, where would we be? Let’s apply a multiple of that. Let’s put the price there. And then ultimately, it made the multiple look really, really attractive, lower, but it was just doing what we could to protect both buyers and sellers. Because if you overprice it, because if a COVID bump you’re not helping anyone buyers are going to balk and sellers are going to sit there going, what’s happening, why why is my business not selling? So we had to adjust it with art, a little bit of science, a little bit of math and logic, but to the best of our ability. Sometimes we were right. Sometimes we were wrong. I had a listing that fell apart completely. It was a COVID bump. We made all those adjustments. And then September’s numbers were lower than September of last year’s numbers and it was mostly because they were selling neck gators that people were using as face masks. So that one tanked. I had a business that was listed when COVID hit it was in the wedding space and that one completely.
Mark Daoust 24:51
We had another one that was in the cruise industry. That was that was about to go to market right before all the shutdowns obviously that got that Got hit as well.
Joe Valley 25:01
So what do you think? Oh, you know, that’s looking back to 2020? What do you think the outlook for 2021 is going to be in the space that we’re at?
Mark Daoust 25:10
Yeah, it’s been interesting, I’ve almost seen and what it feels like is happening. And I hate to use such a subjective term as a field. There are some data behind this. But just from the conversations that we’ve been having with potential sellers, 2021 is shaping up right now to be quite a big year for people coming to market. I think among those that are business owners, 2020 was an interesting, difficult multiples here, we’re not really breaking any news, when we say that, in a broad a lot of people to some bigger questions in life as to what do I really want to do? Do I want to own this business? Do I have the stomach for some of the changes here? Having inventory outages from China was difficult for a lot of sellers to absorb, it was very scary. They didn’t know what was going to happen. Having Amazon say, we’re not accepting products from you for a while, because we need to prioritize household items was frightening for a lot of people as well. Conversely, seeing the numbers spike up and then having to try and manage. I mean, it was it brought a lot of people to some questions as to what do I want to do. And I do know a lot of sellers who are in the position of thinking, let me figure out this year, and then I’m going to sell next year. And we’ll see if that actually happens. Obviously, when things calm down, maybe a lot of these these sellers, who otherwise would be coming to market will say you know what that we got through it, we’re okay, we like where we’re at. And the new floor that we have, as far as revenue is actually much higher than we expected to be. So that’s that’s possibility as well. But 2021 right now is shaping up to be a banner year for transactions both on the buy side and on the sell side, because one of the other elements we saw in 2020 was an increase in the buyers for Amazon FBA spaces, particularly those that are aggregating these various companies. And I know I’ve done interviews with multiple publications, including Forbes and practical ecommerce, about these, these aggregating companies and the rise of these these aggregating companies. So that that’s what I’m seeing and for 2021. Joe, I don’t know if you have anything else on that.
Joe Valley 27:21
Yeah. I think 2021 could be a banner year as well. We have, you know, a potential deal flow problem, right, we’ve had, and many of the listings that we’ve launched in the last 60 days, we’ve had multiple offers more and more buyers than listings available. You know, the last one that I launched, I had six offers on a $3 million listing prior to that had nine on $1,050,000. listing. We need more deal flow. So we’ve brought on Rick out to head up our deal flow to help improve that to reach out first time in 14 years, we’re going to reach out to, in this particular case, FBA business owners and say, hey, look, if you’re ever thinking about selling, let us help. And the way that we help is education. It’s not a pitch that this is what your business is worth its education. It’s like that one I just mentioned that, you know, we were initially introduced to the owner almost two years ago, and her goal was 2.1. Well, we educated her and she held on and now she’s at 3.5, with an exit made more money along the way. We we need more deal flow there, there are more buyers than sellers. So this is my plea to anybody listening that does own any kind of online business, get a valuation first and foremost, so that you can understand what your business is worth. Because you can’t set an exit goal and chart a path to that unless you know where you are today. Now, that’s not a prediction for 2021. It’s a predicament for 2021 that we need more deal flow, especially if we again grow by another 40%, which it could be more than that in terms of total number of transactions in 2021. total value we’ll say much will depend upon these eight figure deals and how many more show up prediction wise in terms of multiples though. Now our last podcast on the 22nd of December was about multiples and how much we despise them. I do expect them though, to rise slightly, slowly, in 2021, simply and complexly because of these aggregators. They’re competing against each other and they have committed capital to spend. And people that work with us avoid the ignorance discount that they’d be giving by working directly with them because you will actually have your discretionary earnings calculated properly. But I think that we’re going to see some of them needing to To push the multiples up in order to buy, because, you know, there’s again a deal flow problem, especially in the FBA side.
Mark Daoust 30:09
What do you think this means for individual investors? For those that are listening and thinking, Man, can I even compete in the space if there’s all these new aggregators? Oh, they definitely can.
Joe Valley 30:17
The aggregators are limited in in many ways. In particular, you know, when they are given money, like, we have one that was given 100, they’ve got 175 million in capital committed capital that they have to deploy. But with that, they can only purchase up to a certain multiple, and then they’ve got to, you know, do a percentage cash, then they got to do an earn out, and they’ve got to do stability payment, if got to do seller notes. The individual buyer, whether you’re a cash buyer, or SBA buyer can be much, much more attractive to a seller, because it’s less complex. Now, the aggregators, you know, pitch that, you know, they can close quickly and all of these other things, I don’t think it makes a difference, the individual seller will pick the buyer, that is the right fit and feel for them. And the biggest secret to being a great buyer is don’t be a Go ahead, Mark, fill in the blank.
Mark Daoust 31:15
Don’t be a jerk. Jerk. Oh,
Joe Valley 31:18
yeah, I was gonna say were so good for you for that.
Mark Daoust 31:21
We’re trying to keep this PG. Keep that. Keep that warning off of the podcast, mm printable to describe vice. Anyways, here we go. Number of offers per LSI. This is a stat that we track internally. And the numbers actually support what you’re saying, Now, you hear this, and you may not think that it’s that big of a change. But we’ve gone from on average 2.5 offers per deal up to 2.88. So 2.9, essentially. So we are seeing an increase in the number of offers that every one of our deals are bringing on. And just anecdotally, talking to the different advisors on a team, the volume of inquiries that we get for every single listing has gone up substantially from, you know, 200, maybe 220 inquiries within a 48 hour window, upwards of 400 plus in some cases, and having a lot of competition for these deals. So I agree. I do think though, you know, despite that increased competition, can individual investors still compete? Absolutely, absolutely. The aggregators are locked into the way that they do things. To a certain extent, individual investors have the ability to be somewhat more creative. And also don’t have the same restrictive covenants that some of these aggregators have, which are going to bind their hands. There’s a reason as well, that this is becoming such a friendly market for sellers and so many buyers into the space. Because we can all read the tea leaves, we know that online business is here to stay, we know that it’s here to grow over the next over years, and the pandemic simply accelerated this, once we understand what the post COVID world looks like, we will have a much better sense of the future of the online world, my guess is that we have this big little bump from COVID, we will have some retraction. But that floor, that floor of revenue that we would expect for an online business is going to be substantially higher than it was pre COVID. And I think that that is what we’re seeing from buyers. That’s what a lot of people are betting on, both in the public markets and also within our little slice of the industry.
Joe Valley 33:25
Yeah, and we didn’t even touch on the political instability of 2020. On to talk about it. Yeah,
Mark Daoust 33:32
totally common, perfectly,
Joe Valley 33:34
no issues. The racial divides the instability with political stuff. That is just an awful year. I can’t wait to blank and have it be behind us. But it’s not going to happen in three days. It’ll be 2021. And we’ll still be wearing masks and all that good stuff. And have another 19 days until the new president is. takes the oath. Yes. Takes the rails. Yes. inaugurated? Yes. 2021, I think will be yet again, another banner year. So I think for those that are in the e commerce space, you’re in the right place at the right time. If you look out another decade, no question about it. This is only a space that’s going to grow. And that includes you and I mark, we’re in the right place at the right time. Of course, when you started this company in 2007, you may not have thought that and when I started in 2012, with Quiet Light. My colleagues and best friends thought I was nuts. Well, I made the right decision folks. I’m in the right place at the right time. love what I do. I love helping more and more people. For those that are out there as individual buyers. Just stay in touch stay on top of the listings absorb the material that we have when a right when the right listing comes out. You should know it’s the right listing because you’ve looked at every listing that we have, the more you look at the more you’re going to know the right fit when it comes along and be able to act with confidence. Get your finances Straight, get a HELOC line, get a line of credit on anything you can get a line of credit on and get your cash in place. If you’re not SBA pre approved, get SBA pre approved for sellers, get a valuation, you won’t know how close or how far you are to achieving your goal. If you don’t know where you are today, and there’s a lot of nuances to it, Mark, you and I have talked about the three levels of add backs. And there’s six levels to each one that’s 18 different levels of add backs. But the truth is, there’s double that, you know, there’s double that there’s so many nuances to it that will help you avoid the ignorance factor and, you know, get a real value for your business. And you can look forward. And it’s amazing. You know, I’ve worked with so many clients over the last eight and a half years now where they’re just, they come to the you know, I want to sell my business because I’m tired, I’m beaten up, I’m emotionally just done. And then we go through that valuation process. And the lights go on. And they’re like, holy, holy, you know what, right PG, I guess I can say shit, if it’s PG man, holy shit. They’re like inspired and motivated. And those those really rough patches that we all have, as entrepreneurs. And Mark, you and I have had eight, there’s no question we made that investments, those rough patches are so much easier to get over when you know, the true value of your potentially greatest asset, and that’s being your business. So get that valuation, get the education and do everything you can to set yourself up for success in the future.
Mark Daoust 36:35
And one of my favorite things I don’t I don’t do a lot of actual deal work these days. And that’s partially for the benefit of our clients just because I, I understand what my level of commitment is, to the deal and other elements of the business, right? I’m distracted by a lot of things. And I want our clients to have somebody who is solely focused on that. But I do valuation calls still. And one of my favorite things with this business is having these valuation calls. And at the end, hearing somebody say, this was one of the most insightful calls I’ve ever had, right where they’ve they’ve learned something about their business that they’ve never really understood before. And they they a world has been opened up to them an aha moment exists where they suddenly see their business as the asset that it is the sellable asset that it is. And also what it could be. If you are not into, you know, talking to people on the phone or don’t want to go through the pains of doing evaluation, which really isn’t painful, it’s a single phone call, we can typically give you a general idea from that I did put together a course you can find it at courses.quietlight.com, it’s a I believe three hours in total, but I broke it up into five minute segments, where we go over, I go over all the elements of evaluation, how to calculate discretionary earnings would be one element of it, but also the four pillars of value. And then we take a look at three specific deals. So real life, real world transactions, and how these four pillars of value and how the discretionary earnings play into the valuations in an actual transaction. Because once you actually get into these deals, you start to see the nuance that can that can really play it again, that’s at courses quietlight.com, we don’t charge for at all is through teachable.com, you can register for free and take it and, you know, let me know what you think about it. But we charge for
Joe Valley 38:23
it because it’s it will it will get people to actually go through the whole course. If you go through the course, you will get I want to say an amazing return on investment. But there’s no investment, I mean, but if you paid $5,000 for it, you’re going to make 10 times return on your investment because you’re going to tweak what you do in your business. And that will you know, increase its value tenfold in terms of the investment if it was a $5,000 course. But it’s free, because we help first more than anything else. The valuations are free. And it’s not just Mark and I there’s 10 other incredible entrepreneurs that are advisors on our team that you would be having valuation calls with. So you can go and fill out the evaluation form online or go to the About Us page, read our profiles, pick somebody that you think you’ll connect with more than anybody else and just send them an email or call them. We’re all accessible in that way.
Mark Daoust 39:18
All right, Joe hopes for 2021 I want to talk about any goals or hopes or dreams you have. And I know we’re just kind of winging this here. So you may not have thought about this, I’ll buy you some time to think by saying my hope is that we get to travel again this year and have some conferences. You know, the conferences I have a love hate relationship with them. Leaving the family for a few days is always, you know, a bit of a chore and I always leave and I wish I wasn’t leaving. But then I get to the conferences and I get to see some of the people that we know buyers, past sellers or just our friends in the industry. miss it. I’m missing some of the people out there that we’ve hung out with that so many different conferences in the past. I’m hoping that we get to do this Again here in 2021, startups, some travel and get together with people and just hang out with some of this awesome entrepreneur community that we have. So that’s my big hope for 2021 is that at least at the second half of the year, we can start traveling again to some of these events.
Joe Valley 40:16
Yeah, I look forward to that as well, you know, I forget when we go to these conferences, that we’re actually at the point of just going to meet old friends, because we’ve gone to the same ones over and over again. on that front, I would love to learn about and go to new conferences with new groups that we’ve never met before. So if you’re part of a mastermind group that we’ve never mentioned, on this podcast, reach out to us, because we’d love to help, we’d love to share our experience and education and information so that you know that the members of that mastermind can grow their businesses and you know, their potential value if they do eventually exit my personal goals for 2021. Yes, I want to travel, I want to get back to life as normal. But I want to be very intentional about the work that I do. And the time that I spend my, my, my energy on, simply because it’s easy for us, as individuals and as entrepreneurs and as a company, just to get just to drift in whatever direction the wind takes us, right? For a long time, we were being pulled into this eight figure listing area, and we were resisting it. But we’ve got some advisors that are really gung ho and talented and want to take it on. And so you know, you and I personally, maybe resist a little bit, you closed one in that area, mine was just short of that. But we’re okay with it now, and we’re being intentional about it. I want to be intentional about my time as well. And I, I’m no Walker dyeable is what I’m going to say every time I talk about my upcoming book, I’m no Walker dyeable. But I’ve been working on the exit printers playbook for 13 months now, right? It’s going to be published in April. And my hopes for 2021 are not that I sell 1000s of books, for my ego, it’s to help 1000s of people understand all of the nuances of what we do when what the value of their businesses, right, I’ve talked to at least 5000 entrepreneurs individually, one on one, one on one over the last eight years. Now everything’s going to be in the book. And so it’s going to be a reference guide to everything that we’ve talked about that you’ve taught me that Jason has taught us that Amanda has taught us that we’ve learned through Brad and Chuck and Walker and David and everybody else, it’s all going to be in one place, that’s going to be a great reference for people to really understand definitively how this thing works in terms of online businesses, and what the values are.
Mark Daoust 43:00
That’s fantastic. And I would echo that as well, I know, you know, with a growing company, as Quiet Light grows and our team grows, our roles change. We take on different roles, I’m really hopeful as well, that I’m able to connect with more people. On a one on one basis, I’ve gotten away from that, largely because I’ve been pulled in different directions with Quiet Light, you know, trying to set up different departments within the company that are going to help us grow and scale in the future while preserving some of the culture that we’ve had, which I think people have have appreciated. You know, as we kind of wrap this up, and I look back on 2020. You know, I started off with the expected sentiment for 2020, which is good returns. But I gotta tell you, I actually have a little bit of an appreciation for 2020. I know it was a difficult year. But I really do believe that difficult times difficult years challenges are what sharpened us and make us better people. You can. But I tell my kids, you know when you hit adversity, it can make you bitter or it can make you better, you got to choose which one it’s going to be and we’ve had a great opportunity to become better this year. And so I have a great amount of thankfulness for 2020 because what I’ve seen over the past year is a real appreciation for those in our industry. We can start off with conferences. I really feel for those that have hosted some of these live conferences, as are Firestones chris hayes to Andrew Guderian. All the people out there that are doing this and how much they have worked to try and accommodate and keep their communities thriving, really appreciated. Our clients have had to navigate through some really difficult decisions. And most importantly, boy am I grateful for the team that we have because this as we’ve gone through. I hate the phrase uncharted waters, right, these unknown times uncertain times. It’s an overused phrase, but that’s exactly what we’ve gone through. We’ve had a group of advisors here at Quiet Light who has been able to work with collaboratively and I feel like we’ve we’ve really done this as a team gotten through 2020. And again, we’re set to be up 40% year over year, which is phenomenal. And it’s not only just the numbers, I think what we’ve been able to do this year for infrastructure, what we built in the future, we have some announcements coming out in 2021, which I’m excited about some content announcements, which I think will be very exciting, but we’ll wait until those actually come out. Your book is coming out in 2021. Honestly, 2020 as difficult as you’ve been, I got to thank you as well. It’s been an interesting year a formative year. And I don’t ever want to look back on challenges and say that I hate them because we wouldn’t be who we are without those challenges.
Joe Valley 45:42
You are such a grown up and
Mark Daoust 45:46
because that’s my wife.
Joe Valley 45:49
I know just a message it gives fantastic so I’m going to go the opposite route. I’m going to say as a reminder, folks, it is my birthday wish me happy birthday. Do it though through giving us a positive review here on the podcast. Go ahead and do that. Let’s Let’s jack up our total reviews in 2021. And for the first five we’re going to send you a nice pair of Happy Feet slippers that have the Clyde logo on it or any pair that you want. Any pair that you want. Chuck Chuck has three little girls they he is it’s a Happy Feet promotion if I’ve ever seen it. He used the loom video to himself with his three girls on his lap looking at the Happy Feet website. And it was precious It was unbelievable. So selfishly, let’s get you some slippers with glide logo by giving us some reviews for the Quiet Light Podcast. This is the second time we’ve ever asked for them both in the month of December. We might be doing it more in 2021 Thanks everyone for sticking with us for helping us for guiding us for listening to us and sharing your experience in 2021. And in the past look forward to I’m sorry 2020 in the past looking forward to 2021
today’s podcast was produced by Rise25 and the Quiet Light content team. If you have a suggestion for a future podcast subject or guest, email us at [email protected] Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.