Podcast Recap: Why You Should Professionalize Any Business w/ Andy Stockett & Tom Rowland
It’s no secret: Andy Stockett loves fishing. And as FourBridges’ Managing Director, he loves helping fellow fishermen succeed financially even more.
Recently, Andy joined a past client and friend, Tom Rowland, on his podcast to discuss why fishing guides should view themselves as a small business, and what planning and financial procedures they should consider putting in place. Tom is a veteran fishing guide turned entrepreneur, who successfully launched several fishing TV shows and even his own production company. Now, the Tom Rowland Podcast delivers business advice, fishing and hunting tips, knot-tying tutorials, and even fitness routines to his millions of listeners.
Even though a fishing guide service is not a typical FourBridges client Tom Rowland asked Andy to share some perspectives on the corporate clients he advises that might be applicable to a one-man guiding business.
Listen to the full episode, or check out our key takeaways from their conversation below.
Investment Bankers & Fishing Guides
Tom knows his audience pretty well — they might immediately tune out when they hear the words “investment banker,” but he quickly reminded them that they should listen up. Many listeners are fishing guides who may think they’ll want to do this forever but need to be prepared for the future.
Tom knows first-hand how FourBridges can benefit a fishing business. Over a decade ago, he was considering expanding his production company to create a new show while also weighing options with his charter business. He turned to FourBridges for their advice.
Andy explained how investment bankers can work for businesses like Rowland’s SE Multimedia, saying, “When someone decides to make a transition in their business it’s a complicated process … we take the role of a guide in this journey.”
Fishing Industry Success
While FourBridges helps companies in a wide range of industries (manufacturing, industrial and commercial services, specialty construction, building products, and more), it’s always fun to take on the sale of a business in the outdoor industry. Andy recalled several interesting deals he’d worked on in the past, including the sale of Yamamoto Baits to GSM Outdoors, and Rock Creek Outfitters to Camping World.
In the case of Gary Yamamoto, he started his business in the ‘80s and quickly gained success with his signature SENKO bass lure. After he was approached by potential buyers, Gary reached out to FourBridges for help, and his company was ultimately sold to GSM Outdoors — a buyer that wasn’t on Yamamoto’s radar as at that time they specialized in hunting products exclusively.
To get back to why you would hire an advisor, it’s because some of the best buyers aren’t the most obvious ones.
How to Exit the Guide Business
In his years of meeting and interacting with outdoor guides, Tom has met a lot of one-man operations who eventually want to move on or retire. Often these highly-lucrative businesses aren’t set up where they can be transferred to a family member or sold, so the owners just walk away, leaving a lot of value behind.
Building value is all about professionalizing your business, even if it’s just a small charter operation or a one-man guide business. While young fishing guides might think of it as a fun way to make money out on the water, the business still needs to be treated seriously at the end of the day.
And this isn’t just a problem of the fishing guide industry. According to Andy, “So many people run their $20 million manufacturing businesses ‘out of a cigar box,’ which means at the end of the month they look in the old cigar box and if there’s money in it….. it was a good month and that’s it.”
Instead, guides should create P&L (profit and loss) statements to identify their actual revenue, determine how much you want to save for the future, and to deal with your fixed assets, like the boat, truck, equipment, and perishable lines and baits. This can be a lot to deal with on your own, so he urges owners to seek the advice of a good bookkeeper or CPA to help you professionalize your financial reporting.
Can (and should) fishing guides teach themselves to professionalize their businesses? In short, no. Sticking to your competencies and trusting experts will be more beneficial in the long run, even when budgets are tight.
Not only are the advisors and bookkeepers there to help you manage your business, but they can also challenge you to think through more of both your business and financial decisions. Not sure where to find a good CPA? Talk to other guides, other business owners (like the owner of your marina), or even just get online and use a virtual resource.
All business owners face the same type of challenges — is buying a new piece of machinery going to improve a manufacturer’s profit, or will depreciation get the best of them? That’s why it’s important to set aside money each month for repairs and maintenance on your fixed assets, allowing you to make those assets last longer and saving you a lot of stress when you finally do have to pay for a big replacement.
It’s hard to think about the full picture of your finances for a year, let alone the next 10, which is where a financial planner comes into play. A good financial planner is there to help you use your money the right way now so that in the future you can achieve all of your goals.
You’re effectively building a mini board of directors for your business.
To really build something sustainable, you need to know where you stand sooner rather than later. Sometimes, people come to see the FourBridges team for a valuation in order to get an insurance policy, and when they hear the number, they think it might be time to sell. On the other hand, business owners might hear about another business selling for 10 times cash flow and think that theirs might go for just as much — which isn’t always the case.
“If somebody’s living in a vacuum and thinks their business is worth X and they’re counting on that nest egg to retire one day, it’d be nice to know sooner rather than later that it’s only worth half as much. Then you can identify why and improve your business practices.”
Having good relationships with return customers is a testament to your skill and reputation, but when you get too comfortable and lose focus on advertising, your aging clients could torpedo your business. Tom mentions that it’s so much easier to go out fishing with a guy you know very well rather than putting on a show and entertaining a new client, but cutting customer concentration definitely hurts in the long run.
After the Sale
Before they even begin the process, Andy asks owners what’s next for them once they “throw the keys” to the new owner.
There are only so many rounds of golf you can play. What are you really going to do?
Andy mentioned a past client, Jack Funderburk of Funderburk Electric. When Jack sold his business, he decided to focus full-time on building churches and seminaries in the Philippines. Using his liquidity, Jack was set financially for the rest of his life and he was able to put some of the money back into his ministry work.
Tom also knew some past clients who pivoted after stepping back from their business. A successful orthopedic surgeon would visit him in the Keys each year, and every year he would stay one day longer. Now that it’s been 20 years, he spends a month down in the Keys. Tom loves the idea of these little goals that eventually make a big impact.
Thinking of what it might take to sell your company and achieve your financial and personal goals? The best way to dive into the details of the process is to check out FourBridge’s Guide to Selling A Business. Thanks to Captain Tom Rowland for the opportunity to share this crucial information with fishing business owners. For more information on Tom and other episodes of his show, check out his website.