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From Yoga Studio to EBITDA Truths: The Hidden Financial Traps in Small Business Exits
What you missed on How2Exit This week
Ronald Skelton
May 20, 2025
Where as I and why you missed a couple episodes. I took a vacation. Went to Mexico and did a reset at a fellow Acquisitions Entrepreneur’s retreat. I apologize that somehow the only thing my team and I missed was sending out the news letter.
I’m back, stronger an healthier than ever ready to serve.
My view for days
Your net worth will never be greater than your network:
Network and hang out with other Acquisition Entrepreneurs and professionals Twice a Month - First and Third Tue, 8am PST: Join
E280: From Yoga Studio to EBITDA Truths: The Hidden Financial Traps in Small Business Exits - Watch Here
About the Guest:
Rosco Graves is the founder of Polaxis Professional Services and a former Deloitte advisor. He’s navigated both the boardrooms of Fortune 500 companies and the trenches of small business ownership—including launching a yoga franchise. Today, he helps small business owners prepare financially for growth, funding, and exits, specializing in turning messy books into stories buyers want to hear.
Summary:
In this episode of How2Exit, Ron sits down with Rosco Graves—former Deloitte advisor turned entrepreneurial CFO—to unravel the financial blind spots that plague many small businesses. From owning a yoga franchise to running Polaxis Professional Services, Graves offers rare insight on what owners get wrong when starting, running, and especially exiting a business. The conversation is an eye-opening roadmap for founders, buyers, and anyone serious about unlocking business value through financial clarity.
Graves doesn’t just talk balance sheets—he breaks down the real-life implications of sloppy books, sketchy add-backs, and why sellers often sabotage their own exits to save a few tax dollars. This is one of the most tactical and truth-heavy episodes of the season.
Key Takeaways:
Most Small Business Owners Don’t Understand Their Financials – Many don’t know what “good books” look like, and believe that filing a tax return is sufficient for running or selling a business.
You’re Not Fooling Anyone with Your Add-Backs – There’s a line between aggressive adjustments and devious manipulation. Sophisticated buyers will catch it.
Clean Financials Win Deals – Having a finance-savvy team member who can explain your numbers is more valuable than having the best broker in the world.
Sloppy Books Kill Value – Underreporting income to avoid taxes might save you 30 cents today but cost you $3 per dollar at exit.
Inventory Stuffing and Payroll Gimmicks Are Red Flags – Buyers should watch for sudden revenue spikes without corresponding operational changes.
Buying Existing Businesses Beats Starting from Scratch – Graves advocates for acquiring operational businesses over new franchise launches due to lower risk and immediate cash flow.
You Can’t Outsource Sales if You Don’t Understand It – Founders must embrace being generalists early on and learn the core levers of their business.
Sellers Often Sabotage Trust – If you’ve lied to the IRS, why would a buyer trust you? Reputation, transparency, and consistency are deal-makers.
Article:
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