107: Making Your Business Transferable, Rebecca Monet

If you’re planning to sell your company one day, how transferable would it be to a new owner? Rebecca Monet joins host Laurie Barkman to share her story about building businesses, letting go, and tough lessons she learned along the way. Rebecca is the CEO and Chief Scientist of Zorakle Profiles. With her prior company, she developed intellectual property that fostered sales growth and a strong client relationship. What could have become a channel of growth unexpectedly became her biggest risk. Having trusted advisors on your side can help avoid unforeseen pitfalls like these.

Listen in to learn more about:

• Building a business with a view to exit
• Seeking trusted advisors to avert costly mistakes
• Potential red flags in contractual agreements
• Separating your identity from your business
• Finding your niche
• Making your business teachable and transferable

Show Links

https://www.zorakleprofiles.com/

https://www.linkedin.com/in/rebeccamonet/

Succession Stories E4 Chris Cynkar

Succession Stories E28 Laura Coe

About Succession Stories Podcast

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Learn more at https://thebusinesstransitionsherpa.com 

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Transcript

Intro:

Rebecca Monet is CEO and Chief Scientist of Zorakle Profiles. She is fascinated with neuroscience and human behavior as it relates to business success. Her tools help franchisors and potential franchise owners predict where they may have the greatest likelihood of success. 

Rebecca shared her story about building businesses, letting go, and some tough lessons she learned along the way. She developed intellectual property that fostered growth and a strong client relationship. But what Rebecca thought was a channel of growth unexpectedly became her biggest risk.

The message that I think is important in this episode is that you cannot build a business that rests on your own shoulders. And having the guidance of trusted advisors on your side can help you avoid unforeseen pitfalls. Enjoy this episode about creating a business that’s transferable to maximize your value with Rebecca Monet. 

Laurie Barkman:

Rebecca, thank you for joining me this morning on Succession Stories. It is going to be a really interesting and fun conversation because I know just looking at your LinkedIn, you’re the first person that had so many deep keywords about franchising but then you describe yourself as a professional cupcake maker, so I have to learn more about that. Welcome. Let’s welcome you and tell us about the cupcakes.

Rebecca Monet:

Oh, my gosh, it’s so good to be here, Laurie. Cupcakes. It’s a big thing in my family. It started a number of years ago. About 13 years ago, when I was living in San Diego, my son, his wife and two children, at that time, came out to visit and it was around Easter time, and I was looking for something that we could do as a family so we decided to make cupcakes and I got all the decorating stuff, those special things that will make different icing on your on your cupcakes and shapes and colors, and all of that stuff. We sat down at the dining room table, and we were decorating cupcakes with various themes of Easter, bunnies and chicks, and all of those kinds of things and my son who is handsome and strong and macho, is kind of pooh poohing this whole cupcake, kind of a thing, but he’s also extremely detailed. 

He sits down at the table and all the rest of us are having a blast making these cupcakes and he’s critiquing us, like, “Oh, now you could do this a little differently, and if you only did this, it would be so much better,” and pretty soon he’s picking out the stuff to do the decorations on the cupcakes and it made this beautiful memory of this macho man sitting down with his family making pretty cupcakes and ever since then, a few times a year we’ll do the same thing with the family is to sit down and decorate and make cupcakes with the children and with the grandchildren. It’s just a beautiful bonding experience and honestly, we’ve gotten pretty good at it.

Laurie Barkman:

You gotta have an Instagram channel for that. Well, it doesn’t surprise me knowing what I know about you and your history in business, you got started in your career as a therapist, so the bonding, the emotional side of getting involved in making the cupcakes and feeling good, that’s why I’m sure you went into therapy, right to help people. Tell me a little bit about being a therapist and of course, part of this story is becoming an entrepreneur and so tell us about that, too.

Rebecca Monet:

Yeah, so I was a therapist for a number of years and I absolutely loved it for all the reasons you’re talking about, which is this idea that you could get into someone’s head and help them straighten it out in some way so they would have more fulfilling lives so I absolutely loved what I was doing and I did a lot of it one on one but what was interesting about my private practice is I only worked with business owners. Initially, it was accidental, I didn’t work with folks that had alcohol problems or marital problems, or financial issues, or any of those kinds of things. It just seemed like I was attracting business owners that were coming and saying, “Rebecca, what’s preventing me from getting to that next level of success?” So that’s why they were sitting in that chair and I became more and more fascinated with this idea of performance and of success and neuroscience of what causes some people to have phenomenal success and what causes others to forever be struggling and I just became very, very fascinated with that. You’re right, that ended up taking me into a world of entrepreneurship, which is a whole other story.

Laurie Barkman:

You sold your practice.

Rebecca Monet:

I did. I did. It was really interesting because one day I had a client of mine who was running a business in San Diego, and our work together was allowing him to have some really great success, and he says to me, “Rebecca, could you do this for a group of people?” Because we were doing it one to one and my background was as a missionary’s, daughter, a pastor’s daughter, and I was taught to be very quiet, very submissive, behind In the scenes, and so when he asked me, could I do this in a group scenario, I said yes, without thinking, and I thought it would be six, eight people around a conference table. The end result was 300 entrepreneurs in a room, and I’m walking on stage. First time I’d ever spoken in public and I gotta tell you, Laurie, it was like, I had done it 1000 times, it was like, where I was meant to be, so I got up there, did my thing and pretty soon these 300 were saying, “Can you come do this,” and, “Can you come do that?” and I began traveling all over the world, teaching these techniques of how to harness what’s between the ears to grow a successful business and so that took me traveling, traveling, traveling, which I also enjoyed, because I got to see all kinds of wonderful places in the world and learn about different types of businesses, so went from a therapist to a public speaker and a trainer, which had me then have to ponder, can I do both? Can I do both? I decided that it was time to sell my private practice,

Laurie Barkman:

You created a set of tools, or you created something transferable. Normally, in these situations, a therapy, like a medical practice, or a therapist practice, you are the main attraction, so what was inherently transferable in that sale?

Rebecca Monet:

You know, it’s so true and I think that’s a, the downfall of a lot of entrepreneurs is they build a business that’s on their own shoulders, it’s not transferable, so it was a set of techniques that were effective, and getting people out of a stuck state, and getting them where they needed to go. It was a process that I had created, that was very transferable and was something I could teach others. In fact, that’s what ultimately happened when I was traveling all over the world. I was teaching others these techniques that they could use on themselves, and on others and so it was a process that allowed me to then train others and be able to transfer that. 

The other thing that was transferable was the actual real estate, so if you have a half a dozen therapists that are using the exact same technique, whether you’re licensing it or simply taking a piece of the action from their practice, because they’re using your techniques, but there was also the real estate, I knew that real estate was a consistent asset, that would increase, it didn’t make sense to me logically, to be leasing a building to run my private practice, it made more sense to me to buy the real estate and ultimately, what happened was, the therapists that I had trained that were working in the practice, and there was a reputation, they would go to these other therapists instead of instead of me, it was the same process. Just different therapists and ultimately, they purchased the practice and the building, which set me free to go travel and teach.

Laurie Barkman:

Yeah, and you had this entrepreneurial bug and the skill set that you had developed, which then led you to other tools that you had created so let’s switch gears and talk about that. You’ve come from this psychology of how do we draw success from something we already know, as you said, between our ears, and how do we find success when we’re stuck. Tell us about what you did next.

Rebecca Monet:

Obviously, I loved the traveling and I loved the teaching and I loved having a bigger impact where everything was one to one. Now I could do those same things in a group so once again, I’m developing tools, I’m developing training materials, I’m certifying others that they might be able to train these, these folks and these groups, so that business continued to grow and I had folks certified all over the world to use the same techniques that I use in my private practice. That business, as it continued to grow, also came to a point where it was not in any way dependent on me, I was making money off of the certifications, but I had trainers that could certify people, I had materials. Back then it would have been, cassettes and CDs, a little different than it is today where everything is online. I likely today would have put it on an LMS, a learning management system online but back then it was in the form of cassettes and those kinds of things. 

It was a very enjoyable process, because I felt like I was making a difference, while at the same time providing a livelihood to many other trainers and facilitators. These were early days, Laurie, today we would call these people coaches. There’s a whole world that has been created and coaching, in my time, it would have been considered therapy and you would address that so basically, it was creating another system where others could replicate without having to be a true psychologist. These were techniques that anyone could use.

Laurie Barkman:

Well, clearly you found a market because you found your way to the franchising industry, with a set of tools that you had created, which became the company called Proven Match and so I think that what you’re describing is how you know that journey of how you got there. Tell us about franchising. 

We’ve talked a little bit about franchising on this show. We’ve had two different guests that have come on where we had that conversation, one who acquired and is still running some successful franchises Chris Cynkar, and also Laura Coe, who created Snapology, and she’s very well known, based here in Pittsburgh, and she has a wonderful global franchise, it’s a learning education, hands on environment for kids and with Legos, it’s amazing robotics and everything, so we’ve had some conversations on this show about franchising but some might be surprised to know some of the fun facts. 

I know, you probably know a lot of the fun facts and you can check my stats here, but about 10% of all businesses in the US are franchises. That might surprise some people and in terms of employment, I saw some data ranges, but it could be as high as 8 million people in the States working for franchise businesses. You and I had talked off air and we both agree that franchises are a great option for entrepreneurs who either don’t want to start from scratch, for the big idea or risk profile, or also because of the ability to get capital. There’s a huge market, there’s a huge market, how did you find your way with Proven Match to create tools to help the franchise industry?

Rebecca Monet:

I was used to creating tools. That was always my mindset that you want to leave something behind in your wake, so to speak, but franchising I wasn’t familiar with. I was helping true entrepreneurs, folks that were inventing, creating their own businesses. What happened was my kids became teenagers and one of them, my daughter, needed another set of eyes on her so I knew it was time to be home or not traveling as much and so I went to bed one night, and I said, in my prayers, “God, I don’t know what’s next. I’m loving what I’m doing but I need to be closer to home. Tell me what’s next.” 

I woke up the next morning, and I had two words in my mind, and it was a business broker and at the time, I didn’t know what a business broker was, I knew what an entrepreneur was, and a business owner was, but I didn’t know what a business broker was. I pulled the Yellow Pages from above the refrigerator. Again, we’re talking some few years ago, pull it down, and I opened and looked for Business Brokers, and there were about three or four of them in San Diego and I called each one of them and I said, “You don’t know me, but God told me to call you and I don’t know what you do but I want to know everything about what you do. I’ll work for free. Just let me follow you around,” and three of the four thought I was nuts… [Laughs]

Laurie Barkman:

[Laughs]

Rebecca Monet:

…but one, Howie Bassuk, had founded a company called FranNet. At that time, he had five brokers, but they specialized in franchising and so I would go into the office every day and observe what he’s doing-which is one of my favorite things to do-is observe people and what makes them tick and create the success and he began to teach me about franchising and I began to teach him about assessment tools and methodologies and systems that can be replicated to help people be successful. That was my first introduction to franchising. 

I was blown away, Laurie, because franchising is an opportunity for someone to own their own business without having to create it from scratch, the franchisor has already worked out the product mix and the services and the marketing strategies, and they got a brand that’s recognizable and basically, it’s someone that can step in and bring the spirit of business ownership, the pride of ownership to their local markets but there are processes and systems and branding that’s already in place so it was a way for people to go into business that may have never been able to do so on their own for various reasons.

Laurie Barkman:

Yeah, absolutely, and so through this relationship, you understood what some of the problems were and you figured out that maybe one of the biggest problems was finding the right match. If the franchisee was not a fit for the franchise, that’s going to be a problem. Very costly to unwind that or to have that franchisee fail is not a good thing. Tell me about that. How did you hone in on what problems to solve?

Rebecca Monet:

Well, that’s exactly what I started to see was it really was about fit, if someone chooses the wrong business or starts the wrong business, it’s like wearing the wrong size shoes and trying to run a marathon. You just never get the traction, you never get the speed or the momentum or ultimately the value out of that business, so it has to be a business that’s a good fit for an individual. 

For the first time, I was no longer measuring or assessing using psychographic assessments on the business owner themselves, the inventor, the entrepreneur, I was now looking at two things. I was looking at who that individual was and what that franchise system was and what it was about those two things that will allow some folks to be wildly successful, and others just to sort of have an average business and I saw that there was an interdependency there that needed to be measured and needed to be understood so folks made wise decisions about what business they needed to be in some of things we’re already aware of, right, so if I’m taking a job, or I’m buying a business, if I’m not a good cultural fit, then I’m going to be uncomfortable and not as good at embracing system. That one we kind of all know, there has to be some kind of cultural fit but there are many different markers, psychographic markers, because this is a true partnership. You’re married to this franchise for probably 10 years, depending on your contract and so you need to be comfortable within that organization.

Laurie Barkman:

Yeah, absolutely. This is a great example of what I advocate not only on the show, but when I’m an adjunct professor at Carnegie Mellon, and the class that I teach about corporate entrepreneurship is finding a problem to solve. If you have that hole in the wall, certainly you’re going to need to buy a drill bit and what you buy is the drill bit, but what you really need is the hole in the wall. You really need that quarter inch hole, you get the quarter inch drill bit and that’s just one example. I love how you sat with Howie, you sat with Howie and you probably overheard conversations and you were observing market problems so you were learning firsthand what these problems were and that’s a big thing we advocate – find the pain points understand the problems, then you develop the tools over time now were these your tools and then FranNet became your client? Is that how it worked?

Rebecca Monet:

That’s exactly how it worked. I had this opportunity to observe how phone call after phone call email after email of how we interacted so I took the science that I already understood and continued to do some research of other sciences that might apply to this idea of partnership, this idea of being a business under an umbrella, because you’re not really an entrepreneur at that point. I had to take what I had already created and look how I could customize and how I could have a very specific application that I had never looked at before, so you’re right. That’s exactly what happened. The tools then became licensed to FranNet, who then provided that tool to their brokers. Now, when I first started with FranNet in 1993, they had five brokers and of course, they continued to grow and even to this day, they continue to grow as one of the best brokerage firms out there.

Laurie Barkman:

That relationship was nearly 20 years. Is that right?

Rebecca Monet:

Yeah, 19 years. 

Laurie Barkman:

Amazing.

Rebecca Monet:

They were clients of mine.

Laurie Barkman:

That’s not probably surprising then if I say to the audience in here that FranNet acquired your business, because it was what we call a natural acquire; a natural acquire can come from a variety of places, it can be a supplier, it can be a client, it could be a competitor and here we have a great example of your client purchase business and this was not a new relationship, almost 20 years, and you had sort of founded it because of the problems that you had learned about there. That sounds like an interesting outcome. Was that something that you had thought about along the way that they might be buying your business one day?

Rebecca Monet:

No, I wasn’t that smart. I just wasn’t that smart. I was too busy creating and researching and developing training and systems and sharing it with the FranNet brokers, I wasn’t smart enough to think, “Gee, I might want to position this to exit at some point,” so it was purely accidental that we got there. Had I been wiser and had good counsel along the way, I probably would have done things dramatically different. In hindsight, our best lesson is always in hindsight, because I made a lot of mistakes along the way, mistakes that the only solution was to have FranNet acquire my company. Now I came out on top, and I’m endlessly grateful but I was not psychologically at a place where I wanted to sell at that point but due to certain things that I didn’t put in place, it was a natural consequence for my biggest client to acquire my company and to acquire my intellectual property and my software.

Laurie Barkman:

Hindsight is 20/20. For us, what would be some of those things, if you could go back in time, you would do differently?

Rebecca Monet:

It would be a list, right, Laurie?

Laurie Barkman:

Right. How much time do we have? I’m just kidding.

Rebecca Monet:

The biggest mistake that I made. I think it was two things. Number one is I customized the tool to such an extent that it had a single purpose, and that was to support the franchise brokers that were working under the FranNet umbrella and within that customization, it didn’t give me an opportunity to do too much outside of that so it limited my income to some extent. The second thing that I did poorly was put an agreement in place written by an attorney that was for the other side that was a licensing agreement that suggested that as a company, Proven Match could not sell this technology to anyone that would be a competitor to FranNet, and of course competitor is a subjective term and you’re probably wiser in this department. It’s a subjective term to me in my mind. The contract was clear. I could not sell to any other franchise brokerage firm or even a business brokerage firm and I was okay with that because I could then sell the franchisors and do some other things. That was my biggest mistake. 

My biggest downfall was not to have additional advice about this contract and to define some of these terms more specifically. Ultimately, I had a very big opportunity by what we would call a franchise portal to work with them on a project and I ended up telling FranNet about it, wanting to include them into this project. Originally, they were all excited. The next thing I know, I’m slapped with a lawsuit saying this other company was a competitor of theirs, never in a million years, would I have thought that this other company was a competitor, I thought they were complementary. In fact, I wanted to bring my client into the deal so their view of ‘competitor’ was very different than my view of a competitor and ultimately, it brought a beautiful 19 year relationship to a halt,  a standstill and we are now in dispute after many, many years of a very nice relationship.

Laurie Barkman:

Wow, what a story. Those of us who have seen agreements and know when there’s language that isn’t clear, and ignored it or moved on, we know we’re taking a risk there because sometimes it can come back and bite us. This is an example of that where a competitor hadn’t been defined a certain way in writing, versus one side’s interpretation versus the other side’s interpretation could have maybe avoided and led to other things, so I appreciate you sharing that story. 

I think it could be a good lesson for folks listening to make sure you have good counsel. If you have counsel. I mean, that’s one issue if people don’t use an attorney, and they think, “Oh, I’ll just do this myself, or I’ll just pull down something from LegalZoom.” As our businesses grow, it can be millions of dollars at stake so it’s worth spending whatever it is, $5,000 or 10,000, it depends. I don’t want to give pricing, but I mean, whatever that is, it’s probably not going to, you have to do that risk assessment and I appreciate it. I appreciate you sharing that with us.

Rebecca Monet:

It’s such an important factor, Laurie, that you bring up because in my case, the agreement was written by a lawyer that sat on my client’s board, that lawyer happened to be a dear friend of mine so I trusted him and I trusted my client after 19 years so I didn’t even have my own attorney look at it. It was just this, “Oh, we’ve been working 19 years together,” and blah, blah, blah. It didn’t even cross my mind, so hopefully, if your listeners take one thing away, you need a shrewd attorney when you’re building your business that protects your rear end for you when you’re just working. 

Like for me, I was working from the heart. It was like, “Oh, I want everybody to have this right,” and it hit me. Now fortunately, in my case, it was a positive result. In hindsight, it was positive but going through it, I cried for two years. I cried for two years. I’m like, “I cannot believe a relationship that’s been so wonderful, is now coming to an end,” and ultimately, my client bought my company, 25 years of research, my software, all of the intellectual property, and I was left with nothing. I mean, literally nothing after that, including my identity was gone because I had this was what I was or at least I thought that’s who I was that my identity was wrapped up into what I had created and now that it was gone, I didn’t know who I was and I didn’t know what to do with me after that.

Laurie Barkman:

Wow. Identity. Wow, that’s a show in and of itself. It comes up very often in my conversations. It’s something that’s so important to you. You spent all that time, all the energy and success that you felt was tied in with that business. How did you move forward? You said it was a lot of tears and I can imagine. I’m thankful for sharing that with me, but how, eventually, did you put your therapist hat on for yourself and say, “Okay, here are the tools I talked about with other people. Now it’s time for me to use these tools.”?

Rebecca Monet:

Yes, that’s exactly what happened. I just kept crying and being in disbelief, and, I did what anyone in that kind of situation should do in my opinion and that is reach out to a counselor, reach out to a business coach, where you can confide in them, and they can help you reassess who you are, and separate who you are, from what your business is. They are two different things. 

One is an asset that you are building and the other is, who you are, and how your mind works, and the vision that you have for the future, so I spent once or twice a week, talking to Betsy, who was my mentor, my coach, my, you know, get me through it, listen to my tears and she taught me one thing that I was very interesting. She said, “You have made your brain and your business, your idol,” meaning that was who I was, that this is what I had become, and as soon as I could remove myself from a place that says, that is not me, that is what I created and it has value, and I’m able to sell it. But it is not me. It isn’t,it is a part of me that I packaged into something beautiful, that had so much value, that my clients are willing to fight tooth and nail to get it and ultimately buy it and so it had me reassess who I was, and go back and build yet another business, which of course is Zorakle.

Laurie Barkman:

How were you able to do that? Do you didn’t have any restrictions? Or did you have a time period of a restriction?

Rebecca Monet:

I had no non-competes as part of the sale, I had no restrictions. The other part that was good is my original concern was the intellectual property, because the tools were at that time based on five statistically validated sciences but because I was using sciences that were open source, meaning this was intellectual property available to Tom, Dick and Harry, I simply researched it, looked at it, took it, repackaged it, it had a very specific application in terms of franchisee franchisor alignment, so I took something that anyone could have taken, and I re-envisioned it. I was able to create Zorakle using the exact same sciences, and then added two additional ones, and not be in conflict at all with what my client had purchased. It didn’t conflict with the intellectual property, I had to be cautious about the visuals of it, and the software behind it but the actual science, which is the important part, was open source and I was not prevented from using it again.

Laurie Barkman:

Wow. There’s a lot to what you just shared, Rebecca. One of the things that stands out to me is what you said, “It’s not me, it’s what I’ve created, and it has value,” and you went on to create another tool, another company and I guess you’re probably over your life experience. Now you do have maybe more arm’s length identity to it than you did in the past, but it’s still a tool that’s in the franchise community and it’s helping so many on both sides become successful so it’s great how you’ve been able to move forward and continue your entrepreneurial drive in the space that you know so well.

Rebecca Monet:

Yeah, and I think that really is a part of it. You have to remove yourself from the emotion because in hindsight now 10 years since the sale have proven that my reach is so much bigger. I’m able now to provide the tool to every broker group out there; franchise broker, business broker group, and every franchise or every vendor supplier thought leader within this space where before I was limited by a contract, which meant my income was also limited, so you just gotta let go of the emotion. It is something you created. It’s beautiful, it has value, sell it and use that brain to create something again.

Laurie Barkman:

Absolutely. This has been an incredible story. There’s so many lessons learned here from finding your niche, making it teachable and transferable, getting good guidance on what really matters in terms of conditions and the legal documents and being able to separate your identity from what you’ve created and who you are, and being able to move forward effectively. I’m sure in your many travels, and you’re so well read that you have a favorite quote, is there anything that inspires you that you’d like to share?

Rebecca Monet:

Well, it kind of goes hand in glove with everything we’re talking about, Laurie. The quote is ‘he who is most flexible wins’. If we get stuck in doing it a particular way and we’re not adaptable, paying attention to our environment, what’s going on in the marketplace, what our competitors are doing and if we’re not flexible, if we’re not adaptable, we are going to lose inertia and momentum and ultimately success, so he who is most flexible wins.

Laurie Barkman:

If people want to get in touch with you, Rebecca, what’s a great way to do that?

Rebecca Monet:

Obviously, always LinkedIn, Rebecca Monae on LinkedIn, our website is zorakleprofiles.com. Those would be the best ways to get a hold of us.

Laurie Barkman:

Awesome. Thank you so much for coming on the show today. It was great to talk to you.

Rebecca Monet:

Thank you, Laurie.

Laurie Barkman:

To our listeners. Thank you so much for your support. You can always catch Succession Stories on any of your favorite podcast players or of course on YouTube. Don’t forget to like and subscribe to the show that really means a lot to us. If you want to maximize the value of your business and plan for future transition, reach out to me for a complimentary assessment at meetlauriebarkman.com. Join me next time for more insights from transition to transaction. Until then, here’s to your success.