EP 5: Melinda Emerson - The SmallBizLady talks small business challenges

Ed Mysogland  1:09  
Welcome to the defenders of business value podcast. I'm your host Ed Mysogland. I teach business owners how to identify the value in their business so that they can sell at maximum value when they want how they want and to whom they want. On today's show. I'm delighted to welcome Melinda Emerson otherwise known as the small business lady. Belinda is America's number one small business expert. She has been a thriving entrepreneur for nearly 15 years, and is an internationally known keynote speaker, Melinda small business advice is widely read reaching more than 3 million entrepreneurs each week on the internet, a pioneer in social media marketing. She is the creator and host of hashtag Small Biz chat the longest running live chat on Twitter for small business owners. Belinda, welcome to the show. 

Melinda Emerson  1:55  
Well, I'm thrilled to be here with you. 

Ed Mysogland  1:57  
Well, I guess my first question is, you started in television, right? 

Melinda Emerson  2:03  
Yes, yes, I was a television producer initially. So how did you become America's small business lady? Well, you know, that's a great story. I'm a very accidental business coach. So, you know, I would hasten you to tell you that it was really kind of the school of hard knocks, you know, like I worked in television. I got my dream job when I was 23 years old, in market for television in Philadelphia, which is where I live, you know, but sometimes you gotta be careful what you wish for it, because you might just get it.

And when you get it, you it might not be what you think it is. And that's kind of what happened to me. I got my dream job. And my dream job was actually a nightmare. And I was like, Okay, I got to do something else. And, you know, Oprah Winfrey was the first journalist I ever saw start a business. And so I modeled my first business as a production company, much like, you know, in the vein of Harpo studios, but you know, smaller. We mostly did corporate industrial work.

But yeah, so when I was 26 years old, I quit my really good job. And I had a laptop, a fax machine, and a dream. And I started my business in the basement of my house. Now, now it is, you know, 20 years later, I'm still in business. So I must have figured a thing or two out.

Ed Mysogland  0:00  
This week I had the opportunity to interview Melinda Emerson. And for those of you who don't know who Melinda is, all you have to do is simply go to the internet and type in small business, and you undoubtedly will run into her. She's known as the small business lady and she has been helping small and mid sized companies for years. And to be honest with you, I'm extremely fortunate that she was willing to take the time and visit with us about small business and growing value, so please enjoy my conversation with Melinda Mercer. Today 80% of businesses don't sell to be a part of the 20% that do add at maximum value, you'll need a successful strategy. Welcome to the defenders of business value podcast, where we interview today's top professional advisors who help business owners create, preserve, and most importantly, transfer value if you want actionable tips that will increase your business value. Stay tuned. The podcast starts now.

Melinda Emerson  3:26  
But literally, about seven, eight years into my first company, I realized that I would have run my business much better if I had had better advice. And so I realized that there wasn't anyone in the marketplace, really giving people tangible, small business advice every day. And given my media background as a blog, you know what, I wonder if I could be that lady, if I could be the one that gives out the advice. And, lo and behold, I started taking down notes about all the expensive lessons I had made in business. And that actually became my very first book, Become Your Own Boss in 12 months, which became an international bestseller in 2010, and 11. And that really put me on this path to being America's number one small business expert. I could not get my name on Twitter, which is how I became a small biz lady as a nickname. And, you know, as I tell people, that's like my superhero moniker. You know, I fly over the city saving one business at a time every night, you know. So that's really sort of like the Cliff Notes of my story. It was, it was very accidental. It was just like, I just thought people needed to know all of the expensive lessons out here that they you had the opportunity to learn. Once you put your shingle out and say you're open for business. I love it.

Ed Mysogland  4:49  
So, and that and that segues right into where I was headed is in your first book. Are you ready to become your own boss? So you talk about the preparation of it. Entrepreneurship. And in, in my practice we, we work with first time, chances are first time business owners, and we're talking more people out of business than in the business because they just don't understand what they're getting themselves into.

Melinda Emerson  5:16  
I talk a lot of people out of business, too. I've been accused of my first book, become your own boss and 12 months being a bucket of cold water in people's faces. But, but I'm like, Look, somebody's got to tell you how crazy this is, you know, somebody's got to tell you the truth. Well, there's

Ed Mysogland  5:31  
not the funny thing is, you know, being CEO and head janitor. And oh, by the way, you're going to be the last person paid. That really, that really puts the speed bump and the entrepreneur journey.

Melinda Emerson  5:45  
Oh, it absolutely does. And people people need to know, like, somebody's gonna tell them like, hey, this thing is not, you know, you gotta be tough to do this, there's gonna be plenty of days where you have to pay other people, and you can't take a check. And you know, and you got to go home and tell your lady that you didn't take a check, which is a whole other thing. That's a whole nother video that people don't even realize. Yeah, no, no, I talked about it and becoming a boss. Because I was like, look and unsupportive spouse can kill a business faster than a bad marketing plan without question.

Ed Mysogland  6:20  
Well, which you prefer? I mean, I think in today's environment, it's probably easier than any time in history to to, to open your own business you prefer? Or do I guess each of them have their own merits? But do you prefer building your own or buying one?

Melinda Emerson  6:38  
You know, it depends on where you are in life and what your what your needs are, you know, for me, I started a business that morphed into a different business, you know, so, for me, I think that I'm running the right business for me. But I do think if you have the resources, and you have really done research on the industry, and the particular business owner, I do think buying a business is very viable. But the thing that I always warn people about related to buying a business, is you need to find out really the real reason why people are selling, you know, because they could be selling to avoid a lawsuit they could be selling, maybe because their kids don't want the business, or they could be selling because their industry is shrinking. So you need to be really careful, and do a lot of research and homework on the industry, and the people you're buying the business from, so that you really understand what you are buying.

Ed Mysogland  7:37  
Couldn't agree more. In your new book, fix your business, a 90 day plan to get your life to get back your life and remove chaos from your business. There are 12 P's that you identify which, which of the 12 Do you do you do find I'm certain all of them are important. But are there two that stand out for you? There's

Melinda Emerson  8:01  
actually three I would tell you people, profits and prospects are the three that trip people up. It's their people challenges in their business, how they're managing money and monitoring profit margin in their business, and their sales process. What is going on for them related to sales? How do they have a specific sales pipeline? Are they rushing to do sales? whenever things get low versus doing sales and you know, marketing stuff all the time, and really understanding the difference between marketing and sales? And so that's the thing that I think trips most people up. And so those are if I had to pick three that we zoned in on it would definitely be those three

Ed Mysogland  8:48  
Yeah, the without question I'm we see the same thing that there's that that those are the ingredients for, for for value, and transferable value, and you and if you align those, it, this whole process goes a lot easier. You earlier it started talking a little bit about the that about supportive spouses. Can you talk a little bit of the clients that you've worked with the emotional aspects within the business that either increase value or detract from value?

Melinda Emerson  9:26  
Well, I think that as you're going into business, you've got to call a family meeting, right? And you also have to be really careful thinking about, you know who you're married to, right? So if you're married to a spouse that is highly risk averse. You know, you have to approach that person not with dreams now with ideas but with facts and figures. You gotta have a deck and give them a presentation like they are the bank. We really if you are are married to somebody that is more of a creative spirit. that is more, you know, ride or die, if you will, you know, you can go to them just with your raw idea and say, you know, I think I have a million dollar idea, let me tell you what it is, you know, you can sprinkle a few facts and figures, but you don't have to be as specific. But regardless of whether you have like the sweetest most important spouse in the world, or if you're married to, you know, a bank Vice President, you need to give them a timeline of how long you're going to pursue this business, before you throw the hat in. And really, my suggestion is that you pad whatever that number you think it is, with six more months. So either it gets 24, tell him it's three years, I mean, just do yourself a favor, because it takes 12 to 18 months for a small business to break, even, let alone get to the point where it's thrown off enough cash to replace your corporate salary. Particularly if you're starting from scratch with your own idea. Now, the beautiful thing about buying a business is when you buy a business, they already have customers, they already have cash flow. And that is a beautiful thing. But at the end of the day, I tell anybody, you got to check how much debt is on that business, you got to check what the debt service is going to be? Are they coming to you with a business that is debt free? Or are you going to have to take on their debt too, because you really got to understand how soon are you going to get a paycheck. And that is key to you figuring out how much money you're going to have to dump in Are you going to have to upgrade any of their systems, you know, there's a big digital transformation of stuff going on right now. And the beautiful thing with that is stuff is so cheap. Like I remember when I started my business 20 years ago, you had to have your own server, you'd have your own guy that ran the server, you had to you know, buy different licenses for all kinds of stuff. Now this stuff is cloud based, it is amazing, you can get anything, and pretty cheap, like pretty inexpensively. But if you're going into a business that's 20 or 30 years old, and they're using antiquated systems, you've got to figure out how much budget you're gonna have to put in to upgrade how that business operates, so that it can operate optimally for you. And so you really just have to understand, I would build yourself a one to three year plan, figure out if you're going to have to borrow money to buy this business, or you're going to have to borrow money to upgrade this business. And how soon does that turn into a check in your pocket? That is very, very critical. When you're thinking about buying a business or what kind of business you want to start.

Ed Mysogland  12:35  
Yeah, we're we see the same thing. And one of the things that I'm hoping, and I have two daughters that, you know, hopefully they want to to own their own business. But what what I'm what I'm seeing and what I'd like to see more of is that there's that these young people come in and buy these baby boomer businesses. And they come in and they add the gas, the technological gas, the all the other things that you know, a 75 year old may they have shunned, you know, in recent recent history, and just add gas to it and see where the business goes. I mean, I think it's a it's a wonderful opportunity for certainly the millennials and because there's such a surplus of businesses out there. So, yeah, so when we I guess one of the questions and because you are so ingrained in the small business community, I mean, what do you think the biggest challenges facing today's business owner,

Melinda Emerson  13:42  
cash flow, cash flow, cash flow,

Ed Mysogland  13:46  
the management of or the lack thereof, both all

Melinda Emerson  13:49  
of the above? I mean, I feel like people are still being strangled for cash. And what's really scary now is that if you look at if you look at the diaspora of financial resources out here, banks turned down 8000 loans a day in America, traditional banks, and there are CDFIs and you know, nonprofits out here that do lending, but it takes them three to six weeks to do even a 20 $25,000 loan, let alone when you're facing payroll on Friday, and it's Monday and you need money. There are very few resources you can go to to get money affordably, I mean, there's plenty of people that will loan you money, you know, and it's almost has become this, like, you know, kind of predatory lending environment that we live in now. I mean, I get calls every week from someone wanting to know do I need money, you know, for the low low APR have, you know 25 To 45% interest, you know, and so, that sounds really scary. I mean, I am excited though, because I'm starting to see You know, Amex is doing loans Pay Pal is doing loans square is doing loans, QuickBooks is doing loans. And they're doing loans at a much lower cost of business than, you know, our friends at on deck and cabbage and some of that stuff. But still, if somebody's taking cash out of your account directly, every week, they're strangling your cash flow. And so the fact that they're not charging you an origination fee, and they're not charging you 20% interest, well, that's great, but they're taking, you know, 14 $1,500 a week out of your account cash flow wise, they're still struggling for cash. And so that is something that is a real challenge for small businesses, because they need money very, very quickly. And so, I would say, balancing their cash management issues, and just access to credit, I cannot tell you how many small businesses ringing my phone needing help, because they don't have lines of credit, because they lost them during the recession and never got them back. And so that is very, very real. I mean, the people that survived the great recession, the Great Recession, killed a lot of businesses, but those that survived, you know, they're they've got some battle scars on them, unless they were of such a size that, you know, the bank saw them of value. But, you know, most small businesses will never grows over a million in revenue, you know, that pizza shop in your neighborhood, he's doing 700,000 A year, he's got six employees for which are part time, you know, the dentist's office in your neighborhood is doing about 600,000. You know, and maybe, because at the doctor, he might be able to have a line of credit, but the pizza guy, maybe not, you know, so you got to look at what's really going on, and look at what your cash position is going to be, obviously, you've got to protect your personal credit, but then you've got to start building what they call business credit, you got to start building that Paydex score, which is something most people don't even know about. And so all of these things position you to borrow, borrow money into, into have opportunities to, to grow. And that's really, you got to look at, you got to borrow money when you don't need it, that you've got to plan your cash, six months, 12 months out so that you understand what you're going to need. And then it also to, you've got to drive your sales around that if you know, you got to make $30,000 This month, you got to make $30,000 This month, so you got to figure out what it is. And you have to do how many calls you have to make how many emails do you have to make, how percent to generate that kind of business, and it's critical. And so all of these things work together.

Ed Mysogland  17:42  
Right. And then the the tough part is that the business owner is fighting 100 other fires, as you know, just just to keep the doors open. So and that's one of the challenges, though, that we see is, you know, these business owners that, you know, it's a lifestyle business, that's that's what they've had. But, you know, 70% of their net worth at least is probably tied up in their business. And they have to, they have to be able to convert that to cash when they retire. And when we were talking in the pre show, one of the one of the things you mentioned was being running the business not necessarily being the business. Can you talk a little bit about that?

Melinda Emerson  18:26  
Well, it's really important that you build a business that can run without you. And I ran into this problem. This is actually what made me become the small biz lady, to be honest with you. I'm going to tell you a good news bad news story. So when I was running my very first company, my production company Quintessence entertainment. Back in 2005. When I got pregnant with my son, I was 32 years old, I got pregnant with my son. And I ended up with a high risk pregnancy on bedrest for six months. And nobody would have ever thought that would have happened. I was a perfectly healthy person. But they thought my child had a heart condition and they had me up at the hospital three times a week any testing done. Well, 2005 was before Wi Fi was in every home in America. So being sent home from my office for six months on bedrest, essentially, almost shut down my company, even though I had nine people that work for me. I was the number one rain maker in my business. And when I wasn't around, there wasn't anyone really making rain. They weren't even really checking my email to make sure that there were opportunities coming in. And I almost lost everything the year that I had my son and I never ever, ever would have thought that something like that would have happened to me and You know, my husband and I, we weren't trying to get pregnant, we just kind of found out we were pregnant. But it was one of those things that that was when I learned that you have to have somebody else in your business that's worrying about how your business makes money other than you, I had a bunch of doers in my business, they will do anything I asked them to do, but nobody proactively did anything. But also to, culturally, I had set it up to where that was the case, you know, I kind of had set up a business where you had to kind of come as mama, you know what to do. And so, when I wasn't there, nobody knew what to do. And I, I built a business that was a cult of my own personality, and almost completely destroyed myself and my family financially, because my husband worked full time in our business, too. And so that was really a super, super scary time. And I'm just grateful that I was able to learn from it, and, and help other people so that they didn't make those kinds of mistakes.

Ed Mysogland  21:07  
Well, first things first, how's your son?

Melinda Emerson  21:09  
My son is 13 years old, wearing a size 13 just been seventh grade. He's great.

Ed Mysogland  21:15  
He must be doing good. Well,

Melinda Emerson  21:17  
he came here and he was fine. But I mean, boy, they terrified me to death. That's why I only have one.

Ed Mysogland  21:24  
I hear you believe me, I hear you. The one of the things we that. From an exit planning standpoint, we always say you know what you want to find the chinks in your armor, take two, three weeks off, don't call the office, every all your problems will will rise to the surface.

Melinda Emerson  21:43  
In the first two days, all your problems arise at the surface without question.

Ed Mysogland  21:49  
Well, I know. I'm certain you probably have a backlog as far as, as clients go, but when I guess when should a business owner call someone like you? And are you taking clients?

Melinda Emerson  22:02  
I'm definitely taking coaching clients and I have a lot of online courses as well that people can take at their own timetable. You know, somebody needs to call me before the house is on fire, but they never do. They call me when it is like the door is burning, you know. And so I have all kinds of triage kinds of things. I actually worked with a young lady a few years ago, who was six months pregnant. And she was about to have her first baby. She had a husband that traveled all the time for his work. And she didn't have her business organized, where it could run without her. And literally three months before this woman had this baby. I helped her completely reorganize her business. And she ended up getting on the Inc 5000 List last year, and increased her revenues by something like 431% In the years after she had her baby. But if she hadn't done that, she would have potentially lost everything when she had her daughter. And you know, so, you know, I use those VIP coaching days really strategically, be believed completely tore down her entire business and built it back up, had her hire people strategically reorganize some of the people she had. And she got rid of like an 800 pound gorilla that was like inside her business kind of holding everything back. And I'm so proud of her because she did what I said, and she won. And she's still winning. She sells yarn on the internet and making millions killing it. And you know, so I work with people as they come. But the thing about it is, is that you got to listen to me, because I've been there done that I got two T shirts. So I'm telling you the benefit of all my experience. So yeah, I mean, I worked with probably about 10 to 15 individual VIP coaching clients a year, but I have group coaching programs as well. And I have online training that people can take my 12 week online course on how to fix their business, if they're just getting started. And they they want to know how to transition from being an employee to being an entrepreneur, by becoming Your Own Boss mastermind program was also something that really helped them. And you can find out about all that information on my website at Small Biz lady.com.

Ed Mysogland  24:39  
And we will certainly link it to the show notes. So one last one last thing before we go. If you had one piece of advice to give our listeners that would have the most immediate impact on their business, what would that be?

Melinda Emerson  24:54  
You know, you never lose in business. Either you win or you learn. I think a lot of times when we make Make mistakes in business. We beat ourselves up. We can't sleep at night. Listen, shake it off. Keep it movin. You got another day to fight tomorrow, do not get stuck on any mistake. No matter what decision you make, you'll never separate yourself from God's love. So don't worry about it. Keep it moving. That's all I can say.

Ed Mysogland  25:19  
I love it. Well, is there? I know you you point it to the website? Is there any other places and I know that you're everywhere on social media. So where can we connect with you?

Melinda Emerson  25:30  
Well, I am Melinda Emerson on LinkedIn, and but I am small biz lady everywhere else in the world. So if you're interested in getting more information for me, every Wednesday night, from eight to 9pm, Eastern, I do a live chat on Twitter. And once a month, we are on video on Facebook live on YouTube and on Facebook. So if you're looking for information about my books, they're sold anywhere books are sold, just go up on Amazon, they're on Audible. They're on, you know, even download any of that stuff. So you can just you know, Google Melinda Emerson or small biz lady, you'll find out everything you need to know about me.

Ed Mysogland  26:06  
Fair enough. I will, like I said, I will link everything that you've mentioned in the show notes, so they have an easy way to get to. So look, you know, I'm so grateful for our time. Truly, it was, it was wonderful. It's like I told you early it was it's been on the bucket list to visit with you. I've watched it from afar, so you certainly didn't disappoint?

Melinda Emerson  26:28  
Well, I appreciate that. And it's so kind of you to ask me to be on your program. And I hope I've given people some jewels that they can take with them as they're thinking about this journey to entrepreneurship. And certainly I would love to have you on my show to talking about business valuation because I think some people think their business might be worth a little bit more than it's worth.

Ed Mysogland  26:52  
I wouldn't have I wouldn't have a job without that.

Melinda Emerson  26:55  
Well, I mean, so I think we need to have that EBIT, done conversation, you know,

Ed Mysogland  27:01  
I will I'll reach out. I'll, after we're done. I'll you I'll send you the contact information. Just tell me which Wednesday you want me to, to fire up my fingers.

Melinda Emerson  27:12  
Perfect. Perfect. Awesome. Well, thank

Ed Mysogland  27:14  
you so much, and I truly do appreciate all your time. Thank you for joining us today on the defenders of business value podcast. If you're preparing your business for sale now or in the future, visit www dot value builders.us To begin your journey to maximum saleable value. And if you want more episodes jam packed with strategies to maximize value of your business, visit defenders of business value.com better yet subscribe now so you don't ever miss an episode.