The Wise Exit

Cashing Out Podcast | E21 | Shannon Wilburn

00:00:02:18 - 00:00:27:18
Todd Sullivan
Welcome to the Cashing Out podcast, where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve. Today, I have a fantastic guest, Shannon Wilburn, who was co-founder, CEO and today is a board member of the franchise sensation Just Between Friends.

00:00:28:06 - 00:00:53:09
Todd Sullivan
Shannon started her career as a fifth grade elementary school teacher, but as a pastor's wife in need of more income, she pivoted into the life of entrepreneurship. In 1997, Shannon and her co-founder opened their first children's and maternity consignment event in Tulsa, Oklahoma. They successfully grew their single location business, and in 2003, they decided to begin selling franchises of their concept all across the country.

00:00:54:00 - 00:01:20:13
Todd Sullivan
Over the next 20 years, Shannon and her team built the Just Between Friends franchise to 31 states with more than 151 locations. In 2022, just between friends systemwide revenue surpassed $41 million. Like for many entrepreneurs, the pandemic brought on a variety of business and personal challenges. So when Shannon was approached to be purchased by her largest franchisee, she knew it was time to sell her business.

00:01:21:02 - 00:01:38:11
Todd Sullivan
Today, Shannon and I talk about her unanticipated start as an entrepreneur, the challenges she faced along the way and her foresight to constantly surround herself with experts and advisors at each step of her entrepreneurial journey. I hope you enjoy my conversation with Shannon Wilburn.

00:01:43:05 - 00:02:10:16
Todd Sullivan
So, Shannon, thank you so much for being on the podcast today. I'm really excited to have you because your story, the background is really inspirational, right? You're this entrepreneur. I don't know if you say by accident, but I say almost by necessity. Right. You're solving a personal problem. And what I really loved about it, hearing the story the first time, is that you tied kind of personal passion and purpose into this company.

00:02:10:17 - 00:02:36:23
Todd Sullivan
You're solving real world problems for a lot of people at the beginning. Maybe it's just a couple of people and that has grown to a $40 million business, but really helping families all over the United States. Right. And and as a fellow founder, I get goosebumps hearing this story. And and then my partner said at one point that you didn't think your your business was big enough to be on cashing out.

00:02:36:23 - 00:03:06:19
Todd Sullivan
Right. And it's not about the size you built in a phenomenal business. It's about the impact we as entrepreneurs have in the ecosystems that we participate in. And our podcast is really about telling your story so others can learn about how you grew and how you exited. So, you know, thank you for agreeing to be on. And last thing I will say is, you know, Mark Cuban had this spot booked, but when I had the chance to drop you in, I was like, No problem, you're up.

00:03:07:04 - 00:03:08:15
Todd Sullivan
So thank you for being here.

00:03:08:22 - 00:03:13:02
Shannon Wilburn
Poor Mark Cuban. He just keeps getting bumped.

00:03:14:13 - 00:03:32:17
Todd Sullivan
Thank you. Thank you for being here. I think maybe a good place to start usually is how we know each other. And and frankly, like, we didn't know each other. We got a chance to chat last week to hear your story and just felt it was so perfect that we had to have you on. You know, really quickly.

00:03:32:22 - 00:03:45:18
Todd Sullivan
So maybe you could take us back and tell your story from, you know, what started your company and and give the reveal the name, all of it. And then we can jump into how it grew and then how you exited.

00:03:47:04 - 00:04:09:03
Shannon Wilburn
Absolutely. So, yeah, my company's name is just between friends. And it's funny because I always whenever I'm at conventions or conferences and I'm speaking to men in particular, they get really excited when I say just between friends. And then I was like, No, it's not what you think. It's not. It's just lunch or any it's. I was like, You're going to be disappointed.

00:04:09:03 - 00:04:43:22
Shannon Wilburn
It's a chill at the market place for families to buy and sell gently used children's maternity clothes, toys and baby equipment. And then they go, Oh, okay. And then they're not interested anymore. So yeah, but I started just between friends in 1997 and I even I feel like I need to go back a little bit further. I have an identical twin sister and my I don't my sister and I were born when my parents were in college, and so they were 21 when we were born.

00:04:44:07 - 00:05:15:01
Shannon Wilburn
And my dad was in college at Abilene Christian in West Texas. And he went on to get his CPA and work in the oil and gas business. And at the age of 33, he was on the fast track to really, really great things. I look back and see where our life was when we were 12, and I'm like, it's it's crazy how what a storied life he had up until up until that time that we were 12.

00:05:15:08 - 00:05:44:03
Shannon Wilburn
And he was diagnosed at that time with multiple sclerosis. And he went from a cane to a walker to a wheelchair at the age of 33. And when he was climbing the corporate ladder and had just gotten stock options and was meeting with people like the Rockefellers and Ross Perot and our life changed and we went from a brand new custom home to brand new cars in the driveway to a rent house with a rental car.

00:05:44:03 - 00:06:12:20
Shannon Wilburn
And my mom went to work and started supporting us and our our life. Our life changed drastically. That's where I was introduced to consignment because my dad, being a CPA, that he was, he put my sister and I on a clothing budget and we had this much money to spend. We could in a year. We could spend it all in January or we could budget it throughout the year.

00:06:12:20 - 00:06:36:00
Shannon Wilburn
And so I knew if I was going to buy myself something that I wanted to stretch the dollar. And so that that's where I got to know. Consignment growing up, went to Abilene Christian myself. That's where I met my husband, who was a youth pastor. And I always say it's not marrying a pastor is not a vow of poverty, but close to it.

00:06:36:21 - 00:07:00:15
Shannon Wilburn
And so when we got married and had children, it was just normal for me to shop consignment. And so I continued that. And just that way of life of looking to find a bargain when I could for myself and for my children. I wanted to my degree was elementary education, and I wanted to be able to stay home with my kids.

00:07:00:15 - 00:07:20:16
Shannon Wilburn
And my husband also wanted that for me. And so we were looking to try to do that. And so I told my mom at one point, If you ever hear of anything I can do from home, let me know. And she was the one who gave me the idea for just between friends. There was something like just between friends happening in Fort Worth.

00:07:21:00 - 00:07:40:18
Shannon Wilburn
But this is back before small business had a presence on the internet. I think email had just come out. This was in 1997, and so she didn't have a lot of information. So I reached out to a friend of mine from church, Devon Tackett, and I told her about the idea and she was like, Can I do it with you?

00:07:40:23 - 00:08:11:06
Shannon Wilburn
And and she loved the idea. And I was like, Sure. So that's how our partnership formed. And we grew that. We started started in Tulsa in 1997, grew it for six years. The two of us. Then we started franchising. We still had the Tulsa business growing alongside the franchise system. That was 2003 and then we reorganized the company in 2011.

00:08:11:12 - 00:08:32:15
Shannon Wilburn
I'm skipping a lot of stuff. Okay? We reorganized the company in 2011. My business partner, Devin, took the Tulsa franchise as her 100% entity, and I took the franchise system. And so and then I got to have a successful exit, which is why we're talking today. So that's the that's the just the.

00:08:32:16 - 00:08:52:06
Todd Sullivan
Phenomenal beginning of the story. And and what I loved was I think you were trying to solve a personal problem. The the idea was there. But could this be an actual business you really didn't know. Right. And so you put on the first event and people kept coming back to you, hey, when are you going to do this again?

00:08:52:06 - 00:08:53:21
Todd Sullivan
Right. And then the light bulbs went on.

00:08:55:07 - 00:09:14:22
Shannon Wilburn
That is exactly the story. It started in my living room. We convinced 17 of our friends to bring their gently used children's and maternity clothes to my house. And Devon and I prepped everything. We got everything ready. We had it over a weekend. We knew it. We knew we did not want this to be a garage sale. And so it was indoors.

00:09:14:22 - 00:09:39:21
Shannon Wilburn
And we use my kitchen jersey's cash drawers. And someone tried to buy my couch, but I made $150 and my business partner made $150. And you're exactly right. The people that came said, When are you doing this again? And the sellers, because they were making 60 to 70% of whatever they were selling. They wanted to know when we were doing it again and the shoppers were saving 50 to 90% off retail.

00:09:39:21 - 00:09:48:10
Shannon Wilburn
So they wanted to know when we were doing it again. And so we came up with the cadence of doing it seasonally. And so that's that's how it is.

00:09:48:14 - 00:10:14:08
Todd Sullivan
Another thing that really struck me in our last conversation is I think it sounds like maybe much like myself and Brian, you're a little self-deprecating. You've obviously built something amazing, but I think that probably benefited you because you talk about bringing expertise at each stage of growth. You and Devon maybe making the decision to get advice from the outside.

00:10:14:13 - 00:10:28:15
Todd Sullivan
Can you talk a little bit of that as you grew it? Because going from, you know, your living room to a $40 million business, there are a lot of stages in there that require adjustment expertise. Yeah, maybe you can talk about. Yeah.

00:10:29:12 - 00:10:56:22
Shannon Wilburn
It's a it's a really good point. And I think it's when you go into doing anything that you have not done before, it's smart to surround yourself with people who've been there and who've done it. And I will tell you one, one thing, just when we started the franchise system, I look back and I'm kind of mad at myself because I feel like we wasted four years.

00:10:57:05 - 00:11:30:22
Shannon Wilburn
We we reached out. We only knew two people in franchising and one was a friend of a friend, and then another was someone who went to our church. And so we met with those two people and gleaned all of this great information. I mean, we drove to Dallas from till I live in Tulsa, so we drove the 4 hours to Dallas and met with someone who had exited his his own ranch system successfully, a founder of CC's Pizza.

00:11:31:11 - 00:12:08:16
Shannon Wilburn
And we he gave us 3 hours and I took copious notes. And then we were like, okay, don't do this. Don't do this. I mean, he told us all this stuff not to do. It was a great start. But had I known that there was an association in my industry where I could go and get so much help and information and, you know, where a lot of the answers to the things that I was dealing with in my business were already solved, and I just had to access that people.

00:12:10:06 - 00:12:29:14
Shannon Wilburn
I feel like we would have saved lots of money in those first four years of doing things wrong and I feel like surrounding yourself with smart people is it's a smart strategy because you can't obviously know everything. And my elementary education degree did not teach me business.

00:12:30:05 - 00:12:57:23
Todd Sullivan
Yeah, great answer. I think I equate that to when you go to sell a business. What we do every day for typically for entrepreneurs, they've never done this before. And there is there are multiple ways to take your company to market and sell it. And we have discovered a way to do that that really lowers that risk. Those four years you talk about that you lose, you lost in money that you lost.

00:12:58:08 - 00:13:21:15
Todd Sullivan
We see time and time again that these exit processes, these sales, they fail and founders waste six months of their time, $50,000 in payments to investment banks that should never have been representing them in the first place. So yeah. Or surrounding yourself with true expertise in whatever you're trying to do rather than trying to come up with it yourself.

00:13:21:20 - 00:13:23:12
Todd Sullivan
Certainly can save time and money.

00:13:23:19 - 00:13:59:21
Shannon Wilburn
I 100% agree. And oh, how I wish I would have known about your podcast 18 months ago. And I yeah, I made an I had a successful transaction successful exit. But you don't know where to look. And I think that's what has been so fun about listening to all of the other people that have been on the podcast already is I can I can see myself in their story and, and I'm and I'm thankful that this podcast is out there because you're 100% right.

00:13:59:21 - 00:14:01:01
Shannon Wilburn
We don't know how to do it.

00:14:01:02 - 00:14:27:13
Todd Sullivan
Well thank yeah thanks for sharing that Shannon When let's go back a second. When you and Devin, it sounds like at some point did I get it right? 2011 When was the time when you decided you be the franchise owner and I will run the business. Can you talk a little bit about that decision to say this business is getting really big and we have different skill sets, right?

00:14:27:13 - 00:14:47:01
Todd Sullivan
And we should make this move? Can you talk to us about that? Because I think a lot of people will face that with a co-founder. It's not only levels of expertise, right, but it's what you want to do with your life. So maybe you could talk about I don't want to call it a separation. You define it how you how you see it.

00:14:47:01 - 00:15:10:07
Shannon Wilburn
Yeah, we we called it a reorganization because we owned both. Okay? If I if I was giving advice to someone starting a business right now, I would say don't ever have a 5050 partner. Give someone 51% because some of our decisions stalled because we know when was the final say. And so if you want me to get into that, I can.

00:15:10:07 - 00:15:48:16
Shannon Wilburn
But I think growing, growing to businesses with the same person Devin absolutely is is and was the detailed person and I was the big picture person. And so it worked really well in the in the franchise because we had very specific things that we were going to do. I was in charge of these things in the business and Devin was in charge of these things in the business and so we were able to kind of stay within those guardrails.

00:15:48:16 - 00:16:17:10
Shannon Wilburn
And that was really what made the the Tulsa business grow. We both were working at our skill set and then when we started the franchise system, we were working together all the time. And I think looking back, we tried to delineate our the skills and delineate the tasks that we had to do for that company. But I don't think we really put a lot of strategy behind it.

00:16:17:10 - 00:16:41:16
Shannon Wilburn
And I would suggest that people do that. When you have a business partner, make sure that you're both working in your skills and for the greater good of the company. And we did that. And so what happened was the Tulsa business, when we started the franchise system, we thought that the Tulsa business had capped out in its gross revenues.

00:16:41:16 - 00:17:04:21
Shannon Wilburn
We're like, okay, we think we're the biggest children's consignment event in the industry. There was no data out there proving that, and we just felt like we were like, There is no way we can get bigger than this. This is crazy. I think we were doing maybe $180,000 events at the time and and then that was that was when we thought we need a franchise.

00:17:05:09 - 00:17:26:23
Shannon Wilburn
That was kind of the beginning of 97. And then in the fall of 97, after we had made the decision to franchise, I think that next event we did 220,000 in six days or whatever. And so we're we are, you know, we've gotten to the point where we think there's no way we will ever do more than this.

00:17:27:11 - 00:17:51:20
Shannon Wilburn
And so let's go ahead. We had had people coming to us saying, you know, we'd like to buy franchise. And I'm like, what the heck? I don't even know what a franchise franchise. And I had a friend of mine ask me, is your is your Tulsa business profitable? Yes. We had helped other people get started in other areas, so we had basically given away intellectual property.

00:17:51:20 - 00:18:02:11
Shannon Wilburn
Of course, I knew nothing. I didn't know any of these terms at the time, and so we were proving the concept. I didn't know what that meant in other states, and so it looked like we were operating as a franchise.

00:18:02:21 - 00:18:15:21
Todd Sullivan
They were using your brand as well. So they have your playbook and your brand. So at least you got you got to see right by helping others, you got to see if it could work without the two of you running the ship, Right? Yeah, that's interesting.

00:18:15:21 - 00:18:35:20
Shannon Wilburn
And honestly, they were contributing to the brand at the time as well, because if if we would give away, of course, this is how we get consignors, this is how we get shoppers, this is how you do your marketing. This is, I mean, anything we knew we were gladly sharing it, but it became overwhelming because we were on the phone all the time.

00:18:35:20 - 00:18:53:20
Shannon Wilburn
This is how you do this. This is how you do it. And so someone was helping me. Like he said, you should franchise this. And I was like, What does that even mean? I went and left his office and bought the book Franchising for Dummies. So read that from cover to cover. And that was really in 90, 97 when we said, okay, we did a lot of praying.

00:18:53:20 - 00:19:08:19
Shannon Wilburn
Okay, let's go ahead and let's go ahead and start this. And again, thank you. And we're camped out with the Tulsa Business. Let's start. This is our next endeavor. Let's do it. And that business.

00:19:08:19 - 00:19:13:07
Todd Sullivan
Start. Was that the point? Go ahead. The two of you separated and reorganized. Okay.

00:19:13:16 - 00:19:46:21
Shannon Wilburn
So we were we were 50, 50 partners in both. That was in 2003. So we in 2004, we started selling franchises and we did that. And together until 2011. So if you remember, 2008, 2009, the Great Recession was really good for us because we're in a recession proof business when people aren't. The clothing for your kids is not discretionary.

00:19:46:21 - 00:20:16:03
Shannon Wilburn
And when we're helping people save 50 to 90% off retail, we just had lots of leads, lots of people wanting to buy a franchise. And the Tulsa Business was growing. So from 1997 to 2003, we grew the Tulsa business. From 23 to 2011, we grew both businesses together and when I left the Tulsa franchise in 2011, the Tulsa franchise was doing 1.40 in a year.

00:20:16:03 - 00:20:16:07
Todd Sullivan
Yeah.

00:20:16:19 - 00:20:43:04
Shannon Wilburn
And and it was we what we were doing and this sounds horrible to say, and any of my franchising friends, when they hear this, they will be like, Oh, it'll probably make them nauseous. But we were ignoring our franchisees. If I'm just being honest, while we were running our own business. The point of having the franchise system is to have highly satisfied profitable franchisees.

00:20:43:17 - 00:21:14:08
Shannon Wilburn
Guess what doesn't happen when you're ignoring them? They're not highly satisfied. And so we decided this. The Tulsa business had gotten so big and was taking so much time, effort and needed focus. And the franchise system was also growing at a significant rate because the recession and we felt like we we can't ignore our franchise owners. That's not going to help anyone.

00:21:14:08 - 00:21:47:00
Shannon Wilburn
And so someone has to have a focus. So we decided to reorganize the company and I worked with a and advisor, I will say a mentor at my church who had has made multiple exits himself. And he and I said, how do you how do you do this? You know, And he suggested because we had two business together and we had just done evaluation the year before, not thinking we were going to have any exits or any reorganization or anything.

00:21:47:00 - 00:21:50:20
Shannon Wilburn
We had just done it to see how much our businesses just want.

00:21:51:03 - 00:22:10:14
Todd Sullivan
Know that I stop you just for one second. So that's just a really valuable point. A lot of businesses want to know, you know, what are we worth? Because it helps you make decisions, right? Where are you going to spend time? What can really grow your your enterprise value or your valuation? So something made you decide that you wanted to get a valuation.

00:22:10:19 - 00:22:15:09
Todd Sullivan
What do you remember? What that was specifically? Was it a tax purpose or legal purpose?

00:22:15:15 - 00:22:27:03
Shannon Wilburn
I don't know. I don't think it was a tax. I think it was just curiosity. It was what are what are we were you know, and and so and I'd say.

00:22:27:03 - 00:22:31:20
Todd Sullivan
All right, how did you go about doing the valuation? Who did that for you?

00:22:31:20 - 00:22:53:05
Shannon Wilburn
It sounds silly now, because I have so much. I don't have a ton of financial acumen. I get I have lots of people around me who are very smart on the financial side of the business, but I really had zero financial acumen at that point. And so I just started asking around like, where do you get a valuation done?

00:22:53:05 - 00:23:20:21
Shannon Wilburn
And our CPA, his firm did valuations. And so that's, that's what we did. Okay. And it because I went through that, what it taught me was, okay, these are the levers that matter. Before then it was how much money do I have in my bank account, right? That was it was all about cash. Sure it was there was no strategy.

00:23:20:21 - 00:23:53:06
Shannon Wilburn
I don't even think we were budgeting like that's how little financial acumen we started budgeting. So anyway, I've learned so much, and you talked about being an accidental entrepreneur. I do that when I speak at conventions or conferences or whatever. If they don't really care what I'm speaking about, My title of my speech is Lessons from an Accidental Entrepreneur, because there's so much learning of course, that goes on in 25 years of business.

00:23:53:12 - 00:24:21:06
Shannon Wilburn
And so anyway, back to back to the story. We we've we separated the the companies were already separate entities. They were they were already separate entities. So that was helpful. And my advisor from church, I said, how do you how do you do this? And he said, Let's put the pie together. You split the pie and let her choose what she wants.

00:24:21:17 - 00:24:47:06
Shannon Wilburn
Huh? And having a twin sister, that really resonated with me because I had done that my whole life with my twin sister. Here's one piece of cake. Yeah, Your piece is bigger than my piece, you know? And so I had had experience saying, I'm going to cut it. And you pick the first piece because you want to make it fair.

00:24:48:06 - 00:25:09:07
Shannon Wilburn
You want to make it as fair as possible. Because if she chooses this piece, I have to be okay with this piece, which is this piece. I have to be okay with this piece. So let's make it as fair as possible. So I did the cutting and then she did the choosing and she chose the Tulsa business, which was absolutely the smartest financial decision at the time.

00:25:09:08 - 00:25:13:20
Shannon Wilburn
Yes, it was 100% the smartest financial decision.

00:25:13:20 - 00:25:36:17
Todd Sullivan
But it also sounds like it was the smart decision based on skill set. Right. You were able to see the big vision of the franchise model support a lot of people. Right. It sounds like to me that you would be very supportive of all of these franchises where she in on the detail side of it could manage a growing franchise really well.

00:25:36:17 - 00:26:02:15
Todd Sullivan
So to me, that logically sounds right. Let me just try to address one thing, because the problem that you face with 5050 partners is is certainly not unique. And I tend to agree with you that partnership, starting at 5050, that can be problematic unless you're outlining that in an operating agreement to decide how those ties get broken. And you can have some mechanism, you can have a board of directors, right?

00:26:02:16 - 00:26:06:18
Todd Sullivan
There are a lot of ways around that. If you if you have the foresight.

00:26:06:18 - 00:26:14:01
Shannon Wilburn
And oh, I have learned all of this. Yeah, I didn't know that in the beginning. But anyway.

00:26:14:11 - 00:26:35:14
Todd Sullivan
Well, the other thing that you said around valuation, which to me that's like that's your intuition saying what is this thing really worth? And then it allowed you to potentially split that pie, right? You had a better understanding of what the business was worth. The comment I like was it's not just about what goes into the bank account, right?

00:26:35:14 - 00:27:06:23
Todd Sullivan
It's not the revenue, It's not necessarily the profitability, it's the levers that you mention. And that might be customer concentration. It might be the technology that you're using. There's so many levers that if you understand, oh, that's not a good thing. Oh, recurring revenue is really, really valuable. Just having that valuation and getting to know the levers that you can pull to improve your valuation in the future is enormously valuable.

00:27:06:23 - 00:27:29:10
Todd Sullivan
We work pretty closely with clients on trying to figure that out. And for us, our experts are industry specialized M&A experts or investment bankers. They're the ones that understand valuation really well in their specific industries, and those valuations change. They can change on a quarterly basis, right? The world we live in, the swings left and right or up and down are significant.

00:27:29:16 - 00:27:37:04
Todd Sullivan
So I appreciate you. You bring that up. There's so many things that can really affect valuation. And if you're operating a company, you want to know what those are.

00:27:37:17 - 00:28:35:02
Shannon Wilburn
I'll tell you, Todd, I feel like that was the very first time where I started to have an understanding of EBITA and and again, I have lots of people that are financially savvy around me now, but I knew that I didn't that the financial, the financials of the business were going to be the thing that mattered. And so not only did did it matter for me, but we also started teaching our franchisees about money and about the financials, because I'm not the only one that comes into a business not understanding, you know, what a piano is.

00:28:36:13 - 00:28:55:09
Shannon Wilburn
I think there's lots of people who start a business because there's a need and they they don't understand. And so I'm again, I'm I'm thankful for expertise and advisors that have surrounded me through this process.

00:28:55:14 - 00:29:22:13
Todd Sullivan
You know, it brings me back, Shannon, to you were trained as an educator, right? And that's what the franchise model is about, right? You're giving back to every franchisee that education, what you learn and you talk about finance. A lot of people get in the business and they really don't understand how much the financials matter. You can get that product market fit, but if the economics are not working, that business is not going to survive or thrive.

00:29:22:13 - 00:29:32:14
Todd Sullivan
So you giving that back after learning it yourself? I mean, that's incredibly valuable. It's it's largely I bet that's a big reason why the businesses continue to be successful.

00:29:33:07 - 00:30:08:16
Shannon Wilburn
Well, and I and I feel just a little bit sad that I didn't know it earlier because of because we've had some franchises fail. I mean, we've had failures within just between friends. I in fact, when I tell the just between friends story to franchisees, I talk about 2010 and I called 2010 the year of austerity because it was sold 30 franchises in 2009 in the Great Recession, because everyone's leaving corporate America and they're looking to take back their life.

00:30:08:16 - 00:30:36:13
Shannon Wilburn
And I didn't understand, oh, we have to support them and they're not in business yet. And so we you know, we're doing all these trainings. We were having to hire people and we didn't have the cash flow to support it. And so I'm so I had an advisor say, you tell people don't buy a paperclip without your without your.

00:30:36:13 - 00:30:47:20
Shannon Wilburn
Yes. And it was we called 2010 the year of austerity because we were like, we have no money to spend. And if we're going to stay in business, this is.

00:30:47:20 - 00:30:48:11
Todd Sullivan
It you got.

00:30:48:11 - 00:30:50:17
Shannon Wilburn
To out yet? We figured it out.

00:30:51:19 - 00:31:15:10
Todd Sullivan
So. All right. So you've had essentially the first exit, right, where you split the company up. And it sounds like valuation was a big part of that. And then you're splitting the pie, letting your partner choose, and now you're kind of off and running, obviously supporting each other because you're in, you still have the same brand, but you continue to build the franchise model.

00:31:15:10 - 00:31:21:12
Todd Sullivan
And what happened that made you decide this is the right time to consider an exit of that side of the business?

00:31:23:08 - 00:31:47:05
Shannon Wilburn
You know, I think being a part of the International Franchise Association, they have done a really great job of educating franchise owners on exits and of course, there's lots of money out there right now. And so you have private equity knocking on the door. You have other people calling you saying, you know, have you ever considered selling your business?

00:31:47:05 - 00:32:17:09
Shannon Wilburn
And Oceana and I want to introduce you to my friend who helps people sell their business. And it's just it is that has been going on for a while. But I you know, I was concentrating on growth from 2011. I was like, we're going to grow. We're you know, in my mind, I thought and this probably sounds so silly to say, but I was like, I think I'm going to be ready to sell my business when I'm 57.

00:32:17:18 - 00:32:40:21
Shannon Wilburn
Who knows where that number came from? I mean, it was just an irrelevant number that I just pulled out of the air. So who knows where that came from? But I thought, I'll be ready to sell my business when I'm 57. And I had a great advisor again, tell me at one point she and and you always need to be ready to sell your business in five years and.

00:32:41:05 - 00:33:03:13
Shannon Wilburn
Okay, well, what does that mean? Okay, You need to make sure that your contracts are in order to make sure that your panel is in order. Make sure that your taxes are in order. Like all of the stuff that people are going to care about, make sure that this stuff is in order. Because if even if you wanted to sell, if that stuff is not in order, you're not going to have the chance.

00:33:04:17 - 00:33:32:15
Shannon Wilburn
And so I had heard that. And with all of the education that happens, there's always a panel on private equity at our franchise conventions. There's always a panel on how do you exit. They do a great job of educating franchisors on how to exit. And then I had I just I just made myself a student, honestly. Todd, of how do you do this?

00:33:32:15 - 00:34:00:01
Shannon Wilburn
Yeah. And there's so much to learn. And again, I wish your podcast would have been around when I was in that really deep education because it would have, it would have really helped me. I probably would have done some things differently. Yeah, just the things I've learned. Just listening to your podcast and biggest thing that changed my perspective and other piece of advice I got is you should always have someone in your back pocket that you would like to sell your business to.

00:34:00:02 - 00:34:22:03
Todd Sullivan
Interesting. Yeah. So it was really the two things it sounds like one was at some stage of life you want, you're thinking, okay, that's going to trigger the exit and then you're getting advice, okay, Always have your house in order in case. Somebody comes knocking on the door. Right. And I think that it really does make make a lot of sense, particularly on the financial side.

00:34:22:09 - 00:34:40:05
Todd Sullivan
Right. When you said contracts, that makes me think of a lot of engagements that we have where, you know, if you're signing five year contracts or two year contracts, those contracts are worth more. If they've just been signed and there's a lot of runway to them contracts that are going to expire and somebody's saying, I want to get out.

00:34:40:12 - 00:34:59:10
Todd Sullivan
Right. It's much better off that you would go and renew that contract to build value into your business. So, yeah, there are a lot of things you can do to keep your house in order. So when you if you decide to sell right, it makes it easier for you, easier for for buyers. I mean, so now you're you're going into an exit process.

00:34:59:10 - 00:35:10:14
Todd Sullivan
Does that mean that you surrounded yourself with you, you know, expert M&A professionals or did you have inbound interest? What really started the ball rolling for you?

00:35:11:08 - 00:35:41:13
Shannon Wilburn
So what started the ball rolling was, I would say to twofold. My husband, who's the senior preaching minister at our church, he he developed COVID back before vaccines, back before the medicine was out there, and he had preexisting conditions. He's a he has had cancer two different times and has four autoimmune diseases. But if you met my husband, you would not think he was sickly.

00:35:41:13 - 00:36:09:20
Shannon Wilburn
He is vibrant. He is not a complainer. He's awesome. And but he knew if he got COVID, it was not going to be good and he we we we were safe until October of 2020 when he started running a fever and started wheezing. And we're like, okay, you have COVID. And he did. And within three days he was in the hospital.

00:36:10:09 - 00:36:47:21
Shannon Wilburn
And for the next 48 days, he stayed in the hospital and he was actually intubated two different times for a total of 17 days. And he flatlined once I was in the room when that happened. And it that is probably going through that of almost losing your husband was I would say that that was the biggest motivator for me to exit.

00:36:47:21 - 00:37:25:18
Shannon Wilburn
Yeah. And you know, I know a lot of people, loved ones passed away and, you know, of COVID. And I think I was envisioning myself sitting on my couch in my house by myself. And and then when the Lord allowed him to live, it had me really looking at my future and what do I want? Where do I want to spend my time for the next 20 years?

00:37:25:18 - 00:37:58:19
Shannon Wilburn
Do I want to be as busy as I am right now and traveling all over and being in charge and having the responsibility of this and always being needed? Or could I have an exit right now and figure out a way to spend more time with him? And I didn't know that someone was going to reach out to me and say, Hey, I want to buy your business.

00:37:59:06 - 00:38:00:20
Shannon Wilburn
Yeah, but that happened.

00:38:00:23 - 00:38:34:10
Todd Sullivan
It was just really good timing that somebody knocked on the door. Yeah, I think healthy issues are it is just not uncommon that that is what drives the outcome, particularly in partnerships. We see that, you know, all the time. I think a lot of times we encourage our entrepreneurs to really talk with wealth managers to decide what is the right number for them at any given point in their lives, to say, Hey, I can retire, I can buy another business, I can put my kids through school.

00:38:34:21 - 00:38:52:17
Todd Sullivan
And when you know that the valuation of your business is above that number, post tax, write your personal number, then, you know, being open to exiting can make a lot of sense to just as you put it, be able to spend your time the exactly the way you want to spend your time.

00:38:53:06 - 00:39:16:20
Shannon Wilburn
You're going to hear me. I'm going to feel like a broken record, but I'm going to say, surround yourself with smart people and I'm going to say, surround yourself with smart people. Because, yes, we did that. We have a financial advisor, of course. And so I knew, you know, what, That number was good for you, you know. Thank I'm so thankful to have these people who speak into me.

00:39:16:20 - 00:39:48:04
Shannon Wilburn
Yeah. The things that I need to know at the right time and so, yes, I did have a number. And so when my largest multi-unit franchisee approached me very casually, they said we had a meeting every six weeks just to keep the lines of communication open because she was my number one franchisee. And so I already valued her, knew her influence, knew her leadership, and knew that she had what it would take.

00:39:48:05 - 00:39:59:18
Shannon Wilburn
Yeah. And when she reached out to me and said, Hey, Shannon, if you're ever, you know, thinking about selling the business, I would be interested.

00:40:00:05 - 00:40:01:14
Todd Sullivan
That's fantastic.

00:40:01:14 - 00:40:21:20
Shannon Wilburn
Yeah. And she had been she had been working with the coach because she knew that this was something that she wanted and her coach was the one who said, you got to ask. You got to tell her you're interested. And so, again, surround yourself with people who can give you good advice when you need it.

00:40:23:05 - 00:40:49:03
Todd Sullivan
I think, you know, also a lot of the exits that we see, the buyer tends to already know the seller in some capacity, whether it's through, you know, a working relationship or a personal relationship. So it's really important in in business that you are constantly reaching out, creating those kind of strategic partnerships that give people a view not only into your business and how valuable it could be, but also the flip side of it, right?

00:40:49:03 - 00:40:54:20
Todd Sullivan
So you instantly knew this is the right person. I'm sure if you can get the numbers right.

00:40:55:09 - 00:40:56:07
Shannon Wilburn
That was the key.

00:40:57:08 - 00:41:19:07
Todd Sullivan
But what you've done right is if you've built kind of both sides of the scale, you know who the perfect buyer is and you have your number in mind and then you've got your valuation to kind of substantiate yourself and you negotiate option. I mean, that's really ideal to go in understanding those three things. That's really the makings of a of a great exit.

00:41:19:23 - 00:41:43:13
Shannon Wilburn
Yeah, I'll tell you, I'll tell you we did not when she approached me, I, I said thank you. I'm flattered. I'm humbled. I'm honored that you would want to, you know, lead just between friends. And I absolutely believe that you can. Yeah, but I said we've just been through COVID and we're an event based business where people gather.

00:41:43:21 - 00:42:09:13
Shannon Wilburn
And so the fact that we didn't go out of business during COVID was a testimony to, again, our franchisees hard work and innovation. And I think just having all of that brainpower to help get us through and, you know, PPE loans for people and that was that was awesome. But I knew that our valuation would take a hit.

00:42:09:13 - 00:42:37:19
Shannon Wilburn
And then 20, 20, 2019, we had a great year, 2020 we were 40% down. And 2021, I call it our recovery year, okay? And so I knew I told her, in fact, I said, our numbers are not going to reflect the value of I just I knew it because I'm because I, of course, have been through the valuation process before.

00:42:37:19 - 00:43:03:18
Shannon Wilburn
And I'm like, so I don't I don't really feel like we're going to be able to come to an agreement. But let's keep talking the process of having this conversation with her and her team. It was lots of back and forth, lots of back and forth, and we thought we had an agreement at one point and it turned out that we did not have an agreement.

00:43:04:20 - 00:43:32:20
Shannon Wilburn
And she came back and she said, and this was before, because we we didn't have a new valuation. And she said, Would you mind if we do a another valuation? And I'm like, No, let's do it. So we got another valuation done. And my exit number was 30% less than the valuation came back. Wow. Wow.

00:43:32:21 - 00:43:41:13
Todd Sullivan
So what do you think you were I'm sorry to interrupt you, but what do you think you were missing in that second valuation? What were you not putting enough value on?

00:43:41:21 - 00:44:10:10
Shannon Wilburn
Probably the multiples that you get for a recurring revenue business? Mm hmm. I, i, I know the multiples are crazy in franchising, but you, you, I think for me, I didn't know that that would be us. Right. And from probably trying to, you know, look at my friends in franchising and because lots of the deals that are done in franchising of course are private and so they're not out there for the public to know.

00:44:10:10 - 00:44:35:20
Shannon Wilburn
What multiple did you get. But you you hear enough talk and you go to enough and you have friends who have been through acquisition or of some sort. And so, you know, okay, they're getting really good multiples and then you're like, but I honestly because I thought COVID was going to kill us. Yeah, kill our valuation. Sure. Sure.

00:44:35:20 - 00:44:36:03
Shannon Wilburn
Yeah.

00:44:36:10 - 00:44:55:01
Todd Sullivan
So, okay, yeah, that's good. We see a lot of buyers will give that single year a pass that the COVID year and try to look one year behind in one year forward and make sure that you're not getting a COVID bump. Like that's all sustainable. So that that makes some sense. So but now the buyer's got to be a little bit shocked, right?

00:44:55:01 - 00:45:06:20
Todd Sullivan
If you were not quite seeing eye to eye on a 30% below valuation, that had to be a shock. But somehow you've been able to negotiate it and pull it off. How did that happen?

00:45:06:20 - 00:45:16:09
Shannon Wilburn
And I have not asked the buyer about this, but, you know, there's a sense of, okay, it's worth it.

00:45:17:03 - 00:45:17:11
Todd Sullivan
Right.

00:45:17:22 - 00:45:41:08
Shannon Wilburn
When someone else says it's worth it. And then, of course, I negotiated. She she because she was an insider, she knew, okay, we need to take some offer this and we need to take some offer this. And I was, of course, willing to do that because the valuation was higher than I thought and I didn't need all of that.

00:45:41:17 - 00:46:07:13
Shannon Wilburn
And this was back. We grew 20, we grew 23% this year. In 2022, we grew 23%. And the valuation was down, of course, on 2021 and 20, you know, sure. So it felt really good from a selling standpoint to know that I was setting her up for success, if that makes sense.

00:46:07:14 - 00:46:26:16
Todd Sullivan
No, it does. It really does. I think one of the hardest things in in selling your business is to keep it growing, right? So, yeah, you're selling to somebody that's a perfect fit. You're getting the number that you want. This is a legacy, right? Why would you not want this person to have incredible success and see that brand that you built really succeed?

00:46:26:16 - 00:46:31:19
Todd Sullivan
Without that, it's tough to sell a business and keep it growing. Another 23%. That's fantastic.

00:46:32:03 - 00:46:41:06
Shannon Wilburn
She's very well loved by our franchise owners. It's great already. And so that was you know what? I feel like I kind of got a unicorn.

00:46:41:06 - 00:47:06:21
Todd Sullivan
Yeah, that's great. That all those things kind of fell in place. But I think you really did manufacture that yourself, whether you were new it or not. Bringing all of that. Well, I think it comes from you weren't afraid to ask whether it's valuation or how do we grow this business by separating it out. It seems like every challenge that you into, you were able to kind of leap over that wall.

00:47:07:04 - 00:47:16:03
Todd Sullivan
And maybe it was the help of of people that had more knowledge about the subject than you at the time. But. But you pulled it all together.

00:47:16:21 - 00:47:38:08
Shannon Wilburn
Yeah. Well, I will tell you in 20 this was a part of the story that I didn't haven't talked about yet been in 2016 having an elementary education background and growing the company until 2016. I felt like I was getting to the end of my knowledge base of how I can grow from here. Like, what else do we need?

00:47:38:08 - 00:48:08:01
Shannon Wilburn
I'm weakened this, I weakened this, I'm weakened this. I'm I can lead well and this, this and this. Okay? I need people to come into my brand who are strong in my areas of weakness. And but we didn't have the we didn't have the need or the revenue to hire those caliber of people. And so I created an advisory board.

00:48:08:04 - 00:48:34:14
Shannon Wilburn
Oh, good for you. And got this amazing mate, not a fiduciary board because I still owned 100%, but I wanted their expertise. I wanted them to speak into the business with their expertise at the time that we needed. And when when I was going through this process of, you know, the due diligence process and just should I sell, what should I sell for how this is work.

00:48:34:21 - 00:48:53:06
Shannon Wilburn
I went to those people and let them in on it and they were there at the ready to. I think four of my five advisors have been through multiple M&A, you know. Yes. Yeah. So it was super helpful to have that expertise.

00:48:53:20 - 00:49:16:04
Todd Sullivan
Shannon I think that's gold for for a lot of founders, right? You don't necessarily have to hire these people, but finding the experts in different areas of your business and creating kind of a formal advisory board, having people on your team that are really rooting for you, that man, it's obviously it has paid dividends for you and you obviously leverage that really, really well.

00:49:16:04 - 00:49:24:04
Todd Sullivan
So congratulations. So what you know, what's next? What what's up for you moving forward, starting another business?

00:49:25:08 - 00:49:51:11
Shannon Wilburn
Probably. Probably. I just can't help myself. So. So I have another business that I'm running right now that my husband and I have been doing since 2018 here in Tulsa. It's a small business, so I'm I'm doing that. But that really only takes 3 to 4 hours a week. I am currently coaching six people, so I'll probably formalize that a little bit.

00:49:52:15 - 00:50:16:22
Shannon Wilburn
Yeah, and I'm waiting on Revelation for that. Like, okay, what am I going to do? Because neither of those things take, you know, the amount of time that I'm a grandmother now and people think, oh, you're going to you're going to go be a grandmother. And I'm like, I know there's two I'm not going to do. I'm not going to sit at home and twiddle my thumbs and I'm not going to be a full time grandmother because my grandkids do not live here.

00:50:16:22 - 00:50:39:08
Shannon Wilburn
They live in other cities and so if they were local, maybe that would be something that I would get to choose. But it's not. And I and I'm 52, so it kind of excites me. Okay, what's next? What? What I get to go be a part of now to change the world. You know, I definitely want it to be something with purpose.

00:50:39:08 - 00:51:02:05
Todd Sullivan
Well, that the coaching sounds like it is right up your alley. So many people can learn from your experience. And I feel like when you don't know the answer, you know, to go out and get the answer right, that is that is remarkable. And if you can share that with more people that I'm sure that's going to be incredibly fulfilling and, you know, I'm just finished with you know, for us, that is largely our purpose.

00:51:02:05 - 00:51:25:17
Todd Sullivan
I am 52 as well. And when we started exit wise, it was really rebrand of a firm that was just selling businesses. But exit wise, the whys part is about education, and that's what we lead with. We want people to really understand that you can create the exit that you deserve. You know, if you go out and ask and surround yourself with the right people, you're like the perfect example of that.

00:51:25:22 - 00:51:33:07
Todd Sullivan
So I hope that really continues. If people wanted your coaching, where where would they reach you? How do they how do they get a hold of you?

00:51:33:23 - 00:51:59:07
Shannon Wilburn
Well, I'm on LinkedIn. Okay. So Shannon Wilburn on LinkedIn and also you can email me. I'm still working with the brand for three years and advising and I have I have my job description of my new titles, brand ambassador, and of course I love doing that, but you're welcome to email me at Shannon at J f sale dot com.

00:51:59:07 - 00:52:03:15
Shannon Wilburn
So that seems fair. Just between friends J beef sale dot com.

00:52:03:19 - 00:52:17:10
Todd Sullivan
That's great. Shannon, I really appreciate you taking all of this time. This has been really fun. I think, you know, there are so many little stories in there. I hope people can kind of grasp it all, but there's a lot to learn from your story, so really appreciate you sharing it.

00:52:18:03 - 00:52:52:07
Shannon Wilburn
Well, thank you for asking. This has been I'm I have so many friends who are business owners and they don't know how to exit. So it gives me great pleasure now to say you have to go listen to this podcast. You have to get to know these guys because just to know that someone is out there and I because I've had an exit year live to launch another day, I feel like that should be what every entrepreneur gets to do.

00:52:52:15 - 00:53:01:23
Shannon Wilburn
And unfortunately, some people don't. They don't know how to do it. And so again, I'm super thankful for your podcast and thank you for allowing me to tell my story.

00:53:02:00 - 00:53:28:08
Todd Sullivan
That's great. Thank you very much. Thanks again for listening to the Cashing Out podcast. For more founder exit stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcasts. And please remember exercise dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.