How to Exit Your Business Without Selling It

At least 6 million business owners in the US alone right now who have to functionally retire in the next 7 to 10 years. Their bodies are going to start giving out. Those businesses employ 1 in 5 jobs in the US economy. 83% say that they do not have a viable exit plan right now. We're talking about the backbone of our economy potentially breaking. And this is not just true in the US. It's true in Canada. It's true in Australia. It's true in New Zealand. More and more, we just found that owners who started their business for freedom many times are working 20, 30, 40, 50 years, and at the end of that path, they're still not free. They've become what we call the chief everything officer in their business. I've been successful, but what made me successful has now made me essential, and now I can't just walk away without either losing my income or in some cases violating the sort of the unspoken pact they feel like they've made with their customers or their employees. And so it's a huge dilemma. It's a huge problem. All right.

We've got Richard Scholl, who's the author of a book called Exit Without Scaling. Richard, I've been looking forward to chatting with you about your book for a little while. Thank you for doing this.

Yeah, man. Well, I quote you in the book Exit Without Selling twice. So huge credit to how you influenced it and the, uh, the people who have read it will know that. So, uh, I, we've taken a lot of cues from what you've pioneered and the amazing books that you've, uh, you've written as well.

Thank you. Appreciate it. You know, something about the whole idea of exiting without selling that I love is at the end of the day, we only start a business for one of 3 reasons. The first reason is to give us the feeling of accomplishment, right? That we've done something. The second is to give us cash to be able to do whatever we want. And the third is to give us the freedom in our life to be able to enjoy this amazing life. Because, you know, the only metric that is still 100% perfect is the death rate, and none of us are getting out of this alive. So, we are at some point going to exit our business. I don't think yours is die while you're running a business. Yours is really more building a business that allows you to have that free time and allows you to enjoy your life along the way. So, why don't you walk us through kind of the premise of the book, why you wrote it, and then we'll dive in from there.

Yeah, well, I was shocked a couple years ago to discover that we were continuing to see increasing numbers of incredibly solid business owners come to us with a dilemma. And the dilemma was, hey, I've been offered money by private equity, but I don't trust those guys. I want to take good care of my people, or in some cases, I'm not going to get out of it what I really want or what I need. And I also can't keep working like this forever. And then I started to dig into the stats, Cameron, and it's pretty shocking. So when you think about this, right, there are, uh, at least 6 million business owners in the US alone right now who have to functionally retire in the next 7 to 10 years. Like their bodies are gonna, their bodies are gonna start giving out. Those businesses employ 1 in 5 jobs in the US economy. Um, and 80% or more, 80, I think it's the, the new statistic, or excuse me, statistic is 83%. say that they do not have a viable exit plan right now.

Yeah.

And so really, man, we're talking about the backbone of our economy potentially breaking, right? And this is not just true in the US, it's true in Canada, it's true in Australia, it's true in New Zealand. And so when we looked at that, we were like, man, there's gotta be something done about this. And of course there's a lot of other great people out there trying to bridge the silver tsunami gap. There's, A whole move of people acquiring young entrepreneurs, acquiring these kind of aging boomer businesses. But more and more, we just found that owners who started their business for freedom many times are working 20, 30, 40, 50 years. And at the end of that path, they're still not free. Right. In fact, their business owns them. Right.

Yeah. They have a shitty, they have a shitty boss and they're actually the boss.

That's right. Yeah. They've become what we call the chief everything officer in their business. Right.

Yeah.

And, and not, and by the way, a lot of these business owners, they're successful. They're running multimillion dollar companies. They make a good income. But at the end of the day, uh, we, we had one person and we coined this term. They, they basically called it the prison of their own success, which is like, man, I, I've been successful, but what made me successful has now made me essential.

Yeah.

And now I can't just walk away without either losing my income or in some cases violating the, the, the sort of the unspoken pact they feel like they've made with their customers or their employees. And so it's a huge dilemma. It's a huge problem.

I've always felt like if somebody is actually building a company for the purpose of selling it, they probably need to have the same systems and people and processes in place To build a better business regardless, right? Like, if you want to get the best exit value for your company, if you are selling it, everything that you put in place is going to give you the best exit. But all of those things should also give you a better life. So what are they doing wrong that they become that chief everything officer? And is it the kind of thing that what they're doing wrong is they've made the entire business their reason for waking up in the morning? Like, have they lost sight of their hobbies and— Families.

Well, I love what you said, and I want to track back to it real quickly before I answer that, which is you're absolutely right. The things that you do to exit without selling make your business sellable. They, in some ways, they make your business more valuable. And this is one of the best things we love about the exit without selling process is it gives owners optionality, right? And optionality is power, meaning I can sell my business and I could sell it for a good amount, but I don't have to. I'm under no obligation to sell it to somebody who I don't think will take good care of my customers, my people, my reputation, et cetera. And this is where, as you said, this issue is as much psychological as it is logical.

Yeah.

Because this is someone's— I, let's be real, right? As business owners, this becomes our identity. It becomes the place we derive our sense of self-worth. It becomes our community in some cases. And I think it's interesting, you know, they did a study on business owners, and I talk about this in chapter 1, where if you put— if you hook a business owner's brain up and you put a picture of their kids in front of their face, and then you go and put a— you put a picture of their logo in front of their face, the same part of their brain lights up.

No, that's horrible. That's horrible.

It is horrible. But, but it's true, right? It's true. And so, These issues are very much psychological, not just logical.

Okay.

And I think for a lot of owners, the reason, the real root reason at the core that they have built a business that depends on them, we call it owner dependence. That's what we're really after solving. The real root reason, it comes down to the owner's identity and psychological needs are met Correct.

Because they don't have it being met anywhere else, right? So I want to ask about this because I think the only person who's really going to want to exit without selling is a business owner that actually has some hobbies. They have some bucket list activities. They want to have a better relationship with their spouse and their kids and themselves. They actually want to have a better life. So if they can move themselves out of the day-to-day and out of the 20 hours a day or out of the 16 hours a day, Even out of the 8 hours a day to have the business running for them, it frees them up. Is that correct?

Nailed it.

Okay.

And what you just said is so— oh, sorry, go ahead.

Yeah. So, so about 15 years ago, my sister called me. She'd been running her business for 15 years. Her kids were 11, 9, and 7, and she was really having a crisis of meaning. And her crisis of meaning was she wanted to spend more time with her kids. She realized her purpose Had a bit of a shelf life, and when her kids were 16, 17, they were effectively going to be starting to disappear on her. So I said, well, you know, what would it take for you to hire someone to replace you? And she said, it would take 3 people to replace me. And I said, well, how much money are you making today? She said, about $1.4 million in profit. I said, why don't you hire 3 people to replace you? Pay them each $150,000 a year each. Instead of making $1.4 million, you'll make $950,000. And have those 3 people run your business and spend 6 or 7 years being a mom, being engaged with your kids, sharing, you know, connecting with your hobbies. And then when your kids are outta the house, go back into the day-to-day. So she kind of exited without selling. Is that, is that kind of part of the, the model that you teach people?

Yeah, you, you nailed what matters most there, by the way, because the things that business owners will regret at the end are not spending time with their kids. It's, it's not— it really comes down to people more than money. And you can track this across all sorts of studies. But you're right in that I want to address 2 things you said because they're so important. One is whether you realize it or not, you created for her what we call an exit to vision. The reality is Unless you have something more compelling as a business owner that you are going to grab onto, it's very unlikely that you will let go of what you're currently holding onto. And so, what you did is you gave her something that crystallized her value system. And I would assume, based on you telling the story, she realized that if she let go of this, she could grab onto something far more meaningful and compelling. Right.

So, could we rename your book, How to Have an Amazing Life Without Selling Your Company?

I'll read you the subtitle, right? Build a Dream Team, Keep Your Business, and Get Your Life Back. So, yeah, there you have it.

Okay. So, we need entrepreneurs to, like, I've just spent in the last 5 years, I've been to 80 countries. I've been traveling all over the world with my wife. We sold everything. North Americans, I think, are on tilt. Where they say business is my hobby. Well, I got news for you. When you go to your next dinner party, you don't want to hear a lawyer talk about law and you don't want to hear an accountant talk about accounting. You don't want to hear a dentist talk about dentistry. You don't want to hear an engineer talk about engineering. No one wants to hear about your business because it's not your hobby. It's what you do to make money. I think we've forgotten to have some hobbies.

So true. So true. And you know what's funny about a lot of business owners too? Many times when they start having more fun, they start making more money. I've seen this over and over. We have a client right now. I'll just tell this story real quick. We dove into this. We helped him create his Exit 2 vision. We defined his zone of genius. These are all things we talk about in the early phases of the book and our consulting process. But one of the things we found that was fascinating was he wanted to play more golf. He loved to play golf. Borderline semi-pro. That's how good he was at it. And he's a financial advisor, runs a really successful financial advisory firm with a bunch of people. And he felt guilty about taking time off from all the operational stuff to actually go play golf. When we dug into it, we're like, where do your highest value clients come from? He's like, well, I meet 'em on the golf course.

That's pretty cool. Or, or I spend time with, or I spend time with them after they become a client on the golf course. And they get even better, right?

That's right. So, it's like you need to play more golf, man. Your business and people will thank you.

Yeah. You know, I talked to someone about this the other day and I said that we never feel guilty about plugging our iPhone in. In fact, my iPhone was just plugged into a charger. I don't feel guilty about doing that. We don't feel guilty about plugging our Tesla in and charging our Tesla. Why do so many entrepreneurs feel guilty about taking time off? Why? You know, we would never let our racehorse run a race 40 hours a week. No pro athlete does their sport 40 hours a week. Why? Why do entrepreneurs feel guilty?

Hmm. Why do entrepreneurs feel guilty about taking time off to recharge?

Yeah. Yeah. Do you know?

Well, deep down, we all have psychological needs. And the business and our people and our current work, whether we realize it or not, is all a subconscious schema intended to meet those needs.

Yeah.

Um, what's fascinating is the brain does not optimize for what is best for us. It optimizes for what it knows, what it can predict. Okay, so guilt is a, is a signal. We can get into shame-based patterning and all sorts of fun stuff, but guilt is a signal that at a subconscious level you feel that you are doing something wrong. Okay, that signal is not always helpful because your brain is basically going, I don't know if this thing we're doing— I can't predict what will happen if I do this new thing?

Yeah.

And so candidly, man, I think it just comes down to most business owners know how they get their needs met in their existing schema. They know that they get approval every time a client signs a, an invoice or a check to them. They get a sense of significance when they're applauded on industry stages or by peers. They get a sense of strength or power when they feel like they have their hand on the wheel. And they're in control. They get a sense of acceptance when they show up powerfully for their people, right? Those are known mechanisms to get your needs met. And I think for a lot of owners, they've been doing that so long and so hard that taking time off produces guilt because deep down they feel like by getting their— these deep needs they have for rest, they're going to let someone else down.

Yeah.

And in the process, the brain is also trying to keep them from something that is kind of scary or unknown.

Unknown.

Sure. Kind of unknown.

The people that really should be reading your book and devouring your systems are the ones that know that they want a better life. You're, no one, no one is going to change. No one's going to read your book and go, oh shit, I should have a better life. In fact, unless you're ready to have a better life, don't even bother. Correct?

Yeah, I would go so far as to say this. If you're not sure if you want a better life, just read chapter 1 and do what it says, because by the end of that, you'll know. One of the things we talk about in chapter 1 that's so important is, uh, we, we really challenge leaders in the first chapter. It's called Quit Being Chief Everything Officer. And I tell a lot of my own failures as a leader in that chapter. But one of the biggest things we talk about is we talk about 3 things. We talk about your identity. We talk about your exit-to vision, and we talk about your zone of genius. These are 3 things you have to get clarity on as a business owner before you can even decide if exit without selling in some ways is for you, right? So, let's speak to the—

let's go ahead to those. Go ahead.

Let's speak to those 3. So, so from an, at an identity level, you have to decide, are you a business owner? Do you seek to own a business? Okay. Or do you seek to be the superhero? Right? Do you want to be the superhero who steps in, saves the day, and does all of the things? And you have to decide between those. Like, for a lot of owners, I was just talking to a guy earlier today and he acknowledged this. He was like, he runs a multimillion-dollar garage store business. And he was like, I know deep down I'm caught between these identities. I'm The guy who can install garage doors better than anybody else because he still steps in on jobs. Or I could be the guy who owns a garage door business. As silly as this sounds, those 2 people have very different belief systems about themselves, about their team, about their business. You have to decide who do you want to be when you grow up, right? Who do you want to be when you grow up? Because everything we do as humans is organized by our goals and by What future self psychology would say is, this is who I want to be in the future. So, you just have to decide who you want to be when you grow up. Okay? So, start— first of all, it starts there. The second thing you have to do is you have to get clear on what your exit-to vision is because for a lot of owners, again, they will not let go of what's familiar until what they are going to grab onto when they let go is so much clearer and more compelling than what they currently know.

Like, what are you going to do with your free time if you're not working, right?

That's exactly right. I've heard owners say this before. They're like, if I wasn't working, I wouldn't even know what to do with myself. Well, bro, you better get a good answer to that question because I can tell you for a fact, you will never get out of the cycle you're in until the picture of what you're exiting to— what are you exiting to is the question you have to answer.

And the reality is we're only given one chance at having one life, and we probably from now until we're too old to enjoy our life. Most of the people listening, maybe they're 30, maybe they're 40, maybe they're 50. That means they've probably got 40 to 20 years of an able body being able to do the kind of stuff that they want to do to really extract what you want out of an amazing life. And then you're kind of too old to do shit anyway. Like, I feel bad for people that don't have hobbies and bucket list activities. And, you know, especially because you have built a business. That can let you go and enjoy the rest of the world and your hobbies and your passions, right?

That's right.

Keep going. Yeah.

One other thing I'll note on this that I think is fascinating, there's 2 reasons to exit a business and they're very, they lead to very different outcomes. So, when we talk about the exit to vision, sometimes owners will give very abstract ideas like, oh, I just want to work less. I want to travel more. I want to be with my family more. That ain't going to cut it, and I can tell you why. In most cases, you are always either in— you are in— what does Benjamin Hardy call it? He calls it approach mode or defend mode. We say it this way. John Worlow did a study on this. You are always either being pushed out of your business when you exit or pulled out. And they did a study on this. People who were pushed out by issues like health problems, Burnout, uh, marital issues.

Yeah.

Financial issues almost universally regretted the exit.

Of course. Regretted it.

Of course.

Yeah.

Right. Versus those who were pulled out, meaning they had a vision for themselves and for the future that was more compelling than their current reality, that it actually pulled them out of their current role in the business. Of course. And that's what you have to create.

I've got, I've got 2 things pulling me right now. One is I have a bucket list of about 100 things I'll actually share. my bucket list in the notes of this video when we go through it. My bucket list has got like at least 100 things on it that I still want to do and try and achieve, places I want to go, experiences I want to have, festivals I want to hit, stuff I want to learn. And then I have a 5-page description of me as a human 3 years from now, my vivid vision for who I am that I'm trying to make every sentence come true. I'm really being pulled to to have more free time to engage in all of this stuff. And I kind of at times feels like my business is a bit of an albatross to me. I already have enough money. I'll never spend all the money that I've got. I'm, I've been able to, to kind of grow that part of the business. And yeah, I guess so. So, so you said chapter 1 will help people shake them up a little bit to help drive them towards that. What are, what's the next thing? What's the next part of the business that you're looking at in The Exit Without Selling?

So the last piece in chapter 1 is your zone of genius. And I wanna, I wanna hit this because this may be one of the most powerful things. Um, and I stole this term candidly. I reference it in the book. It comes from Gay Hendricks in his book, The Big Leap. But, uh, the thing is, most business owners I meet, one, do not truly know what their zone of genius is, and 2, are certainly not spending the bulk of their time in it.

Right.

We actually define— there, there's owners listening to this right now who are thinking to themselves, well, I'm not ready to exit. Well, let's define what we mean when we say exit without selling. So, to us, exit without selling means 3 things. One, you have a dream team running the business profitably. 2, they need you 10 hours a week or less. You can work more than that if you want. But 3, you have to spend 80% or more of your time in your zone of genius. And your zone of genius—

Dan Sullivan calls that your unique ability. It's the stuff that you really like to do and you're really good at. I have stuff that I'm really good at, but I don't love doing.

That's right.

So my zone of genius would be speaking events, doing media interviews, attending networking events, coaching people. Past that, there's a bunch of stuff that I don't love to do that drains me of energy. So if I could just get myself down to the 10 hours a week of just being in my zone of genius, going to some fun mastermind events with entrepreneurs, man, my life gets pretty rich. And then I've exited the day-to-day of the business. My team is running the business for me. I've got cash coming in for it. Maybe I don't make as much profit because I've hired a couple people to do some stuff for me, but I'm not throwing out the baby with the bathwater. So that sounds like that's part of your system.

That's exactly right. And most owners we found, when they get in their zone of genius, they don't actually want to stop working. They just want to stop Spending the bulk of their time outside their zone of genius, and so I think discovering that crystallizing that for yourself, and then really as an owner making a commitment to go: This is the leader I want to become. This is who I want to be when I grow up. This is the exit to vision that I'm committed to moving towards, and here are my three or less zone of genius activities that I'm going to spend eighty percent or more of my time doing. By the end of that. You should very well know whether you want to exit without selling and if you really do want a better life. And if you don't by the end of that, then hey, I can't help you. Love it.

So, I had written down, can the business run without them? Do they have a leadership team with the skills and confidence to do their jobs? And do they have someone or some system to oversee the entire business to ensure that it stays on track, runs on time, nails the metrics? What else do they need in addition to that to make sure that they can kind of exit from that day-to-day?

That's such a good— those are some of the big blocks that you just put. The devil is in the details of those, as you and I well know, right? So in the book, what we talk about is a 3-phase process that you'll love, right? Because you're the COO, you're known as the COO guy worldwide that we call it the COO cycle. And I actually developed it because I was like, here's what probably I would do based on my experience or what I've seen a great second in command or COO do if you brought me in to fix owner dependence in your business. The first phase is the clarity phase, right? We can't build a dream team unless we have clarity around what it looks like to design that dream team. The vision that By the way, a lot of owners make this mistake. They think, okay, well, I'm going to exit the business. So my, my job is just to collect profits and we'll just let the business kind of maintain. No, no, no, no, no. One of the biggest levers for you to be able to exit without selling is actually to expand your vision because that gives you the leverage to attract the type of A-players you will need in the first place and actually give them the delegated authority to grow the business beyond you. Where your ceiling becomes their floor. And so, for a lot of owners in the clarity phase, that's really what we have to pull out of them because they're burned out. But what they don't realize is that in that burnout, they've actually stopped having a vision for the business that's bigger than them. And that's what prevents them from recruiting the people they need and candidly keeping the people they need fully engaged in moving the business forward.

Right.

So, we talk about that in the clarity phase. In the second phase is the onboard phase. And as you said, the real key here is going to be finding a small handful. You don't need a lot in most businesses, but a small handful of really capable leaders who have A-player psychology, who are bought in on the vision of the business and want to take it to the next level. Right. And who are actually financially incentivized to grow the business and go above and beyond.

And probably, probably financially incentivized to have some kind of a stake in tie their economic interest to profit, tie their economic interest to freeing up your time, right? Tie them to freeing up the amount of hours, like give them the economic interest of getting you to your goals, not just profitability. Is that right?

The, in chapter 4 of the book, we call this win-win comp plans. And essentially most owners have lose-lose comp plans, meaning they lose because they're not getting the best outta their people, and their people lose because no matter how hard they work, it doesn't make a difference on their bottom line. Doesn't matter if they add extra value to the company, they make the same amount unless the boss decides to throw some discretionary bonus at them that they never know if it's coming. Right? So win-win comp plans are exactly what you said. It's giving your people a share in the profits of the business and in some cases, uh, the opportunity to get equity in the business. Now there's nuance to talk through here, but at the end of the day, most people, uh, expect a lot out of their employees and they have given their employees very little reason. So, so owners say things like, well, nobody cares like me. And my question is, have you given them a reason to?

Yeah. Why would they? Yeah.

Have you given them a reason to? Well, no.

Okay.

Well, that pretty much makes sense then.

Okay. So it's discussed stuff like discovering your unique ability, or what was the term you used for unique ability or zone of genius? It's bringing in that small select group of Navy SEALs, like the highly skilled, highly incentivized, highly motivated A-players that can run the business for you. It's having some kind of focus on some goals and some bigger picture that you're driving towards. What's one more reason, then we've got to wrap, but what's one more reason or kind of nugget that you can give people? And then we're going to tell everyone, and I'll link to your book, Exit Was Selling. What's something else you want to leave people with?

Yeah, the biggest thing I would leave them with is once you have the dream team, you have the A-players, you and I both know this, Cameron, it's going to take some time. For them to learn to run the business profitably without the owner. And this is honestly where I see most owners dropping the ball is they're like, okay, I bought— I hired some people. They obviously can read my mind. They obviously know what they're doing. Let 'em go. And then of course it becomes a subconscious form of self-sabotage because they make mistakes or fall on their face or something doesn't go right. And suddenly the owner needs to swoop back in and save the day.

Yeah.

Right. So this is what the operate phase is meant to fix. It's a feedback loop. And most owners underestimate the importance of the age-old principle we knew way long ago that we've lost in our modern age, which is the mentor-apprentice model.

Yep.

Mentor-apprentice model. And you, you can put all the SOPs in place and sometimes people will still ask you because it's faster. You can put all the metrics in place and I believe in metrics and SOPs, by the way. But at the end of the day, if you're not willing to take the time to one bottleneck at a time, teach and train and mentor and apprentice your team to and get all of that tacit knowledge stuck in your head out into explicit knowledge in the system, you're going to end up undercutting the very people that the very, in some cases, expensive people that you've hired to come in. And so my, my kind of parting shot over the bow for that is Uh, don't take shortcuts. Invest in your people. You have a course called Invest in Your Leaders. Everybody should take that course, by the way.

Yeah.

Um, but invest in your people and recognize that the journey of exit without selling is oftentimes, it's, it, it, at a minimum, I've seen it probably be a 12 to 18 month journey. And the large bulk of that journey is not just finding the right people. It's actually working with them in the trenches to remove each type of owner dependency. And transfer that into the team and system. And I'll leave them with this. There's 5 types of owner dependency. Well, we probably, we don't, maybe that will be for another time. I just realized.

We'll do that for another time. I think this is the kind of book that, um, anyone who wants to exit without selling has to read it multiple times, study it, flag the, the, the, the pages, highlight it, and have your men, your team read it as well so that you start getting on that same page. Richard, thanks very much for sharing with us. Super appreciative. We'll be sharing this video everywhere again. Thanks for the time.

Awesome. Thanks for the time, Cameron, as well. It was an honor being here with you.

Appreciate it.