Jim Sterne of 2Y3X: “Real accounting is boring but absolutely critical”

Act like an adult. People in their 40’s cannot eat like teenagers and companies with more than a dozen people can no longer act like it’s fine surviving on credit cards. Real accounting is boring but absolutely critical. The first time I hit profitability, I was elated — not for the achievement, but because I had bucks […]

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Act like an adult. People in their 40’s cannot eat like teenagers and companies with more than a dozen people can no longer act like it’s fine surviving on credit cards. Real accounting is boring but absolutely critical. The first time I hit profitability, I was elated — not for the achievement, but because I had bucks to spend! T-shirts! Client dinners! Staff toys! Wheeee! Did not take long before I had to drop some staff to cover payroll. Short-term thinking brought me down fast. Getting your ducks in a row is like flossing your teeth but it’s really hard to eat anything other than porridge without teeth.

As a part of my series called “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit,” I had the pleasure of interviewing Jim Sterne.

Jim Sterne focuses on creating and strengthening customer relationships through digital communications. He sold business computers to companies that had never owned one in the 1980’s, consulted and keynoted about online marketing in the 1990’s, founded a conference, Marketing Analytics Summit and a professional association, Digital Analytics Association. In the 2000’s Jim also keynoted worldwide and wrote his twelfth book on online marketing called Artificial Intelligence for Marketing: Practical Applications in the 2010’s. Now, he’s helping companies get more value from data, and helping small and medium sized agencies achieve scale at speed with the 2Y3X program.


Thank you so much for joining us in this interview series! Can you tell us a story about what brought you to this specific career path?

I sold apple 2 E computers out of retail store in the late 1970s. I sold business computers to companies that had never owned one before in the early 80s. I sold software development tools to enterprise level companies in the late 90s. In 1993, I tripped over the Internet and focused all of my attention on online marketing. In 2002 I wrote my 8th book which was the first one about web analytics, and I started the Marketing Analytics Summit which spawned Digital Analytics Association. In the past two years, I’ve focused on helping individuals and companies address growth. My storyline has been explaining the application of new technologies as they pop up, and now, helping the company and project owners see new ways of achieving their goals.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

Tragedy plus time equals comedy. For my first conference, I booked the hotel-recommended audio/visual firm at enormous expense. The second time, I found a local independent at one third the cost. The first day of the conference, he showed up five minutes before the start at 8:30 in the morning — drunk. The microphone batteries failed halfway through the every presentation, and the scaffold tower with my sponsors’ banners fell over at lunchtime. Fortunately, everybody was out of the room at the time. Not funny 20 years ago, but a valuable lesson learned in hindsight!

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

You will never go wrong helping other people/organizations achieve their goals. Find out what motivates them and find a win-win.

Ok super. Thank you for all of that. Let’s now shift to the main part of our discussion. Can you tell us a story about how you were able to build a business from scratch, scale and sell it to a bigger firm?

I suffered from solopreneurship for years until I started letting go. I realized a) I didn’t need to make all of the decisions; and b) other people were more experienced and talented than me in many areas. Delegation!!

Based on your experience, can you share with our readers the “Five Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit”. Please give a story or example for each.

Act like an adult. People in their 40’s cannot eat like teenagers and companies with more than a dozen people can no longer act like it’s fine surviving on credit cards. Real accounting is boring but absolutely critical. The first time I hit profitability, I was elated — not for the achievement, but because I had bucks to spend! T-shirts! Client dinners! Staff toys! Wheeee! Did not take long before I had to drop some staff to cover payroll. Short-term thinking brought me down fast. Getting your ducks in a row is like flossing your teeth but it’s really hard to eat anything other than porridge without teeth.

In your experience, is there a difference in approach for building a service based business versus a product based business when you have the intent to eventually sell the business. Can you explain?

It can be easier to scale the manufacturing of an item if it’s a simple item or device. It is seldom easy to scale services as they require finding and training people. But all the other issues are the same. Culture, finance, marketing, workflow are all the same.

How does one go about the process of finding a buyer?

Your professional network is your most important asset. Buyers are not in a database. They do not click on adds “Buy My Business” ads. They do not post “Wanted: Business to Buy” classifieds. It’s all about who you know.

How can one decide if it is better to build a business in order to exit, or if it is better to stick around for the long term and let the company bring in residual income, or if it is better to go public?

This is a totally personal question. Do you love the lifestyle and are happy as you are? Stick around! Do you want to cash out so you can start another business, buy a yacht and take a sabbatical, or go back to the hands-on work you loved when you started the company? Exit! Do you want to impress all your friends or pay off your investors? Go public!

Can you share a few ways that are used to determine a good selling price for the business?

The general rule of thumb is start out with what multiple of earnings or profits other companies in your sector have sold for recently. Then factor in what makes your company a standout. Do you have a unique proposition, a complete risk register, solid customer relationships, a tight succession, and so forth.

How can our readers follow you on social media?

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

Thank you for these really excellent insights, and we greatly appreciate the time you spent with this. We wish you continued success.

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