The Exit Engine Podcast Episode 41: Stay or Go/Sell or Grow?

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Welcome to the Exit Engine Podcast, episode 41. You know, part of what we have to do, um, in this job that is, that goes a little bit kind of unrecognized But I think it's actually one of the biggest pieces of value we can actually bring to founders, right? Is, is the kind of the coaching that they get.

Yes.

Right. In terms of, of, of being able to know what to expect, being able to put them in a position to win. Right. Obviously teaching the things that they may not know. Right. Giving them the tools, the toolset. Right. You know, one of the things that we, we talk about with this, you know, in first grade baseball all the time, which is, is a, is the, we're not concerned about the outcome, right? So we're not, the kids, they all, they all, they wanna keep score. My son in particular is like a, you know, he's the one keeping score in his head, right? He is like all about that. But the reality is, is that, you know, we're not, we're not, the league is not about that. It's too early, right? The, the, the kids aren't pitching. It's a whole thing. But the point is, the story is the outcome isn't necessarily the most important thing. It's the method by which you practice, right? To understand, to get better at the outcome. So in other words, we don't get down on people because they don't execute it the right way the first time. What we're concerned about is, do they know what to do? So the ball, the play's at first base. Do you know what to do? Pick it up, make the throw. Do you know that when you catch the ball, right, what you're going to do next in terms of looking for a runner to double up or whatever? Right. We don't care about the connection you make. Making the connection at the end of the day isn't the thing. It's the, do you know what to do? And that's, I think, one of the biggest lessons that you can learn in exit planning.

Yeah. And it's one of those things where we counsel our clients on all sorts of things, but like investor meetings as an example, right? Like, again, we can't control whether the investor invests at the end, but what we do have a good idea of how you should present the company, right? And the analogy is how you prepare yourself to catch a ball, right? How you prepare yourself, how you conduct practice at the beginning, the things you do that will make you successful are the fundamentals, right? Conducting a meeting the right way. presenting your company and sharing what your goals are, your financials, the basic things that investors want to know. Now, again, at the end, the investor might not invest, just like you might not win the game. However, there's a rote, there's a practice to things that you'll get better at over time, and it'll be natural to start presenting your company in the way that investors expect them, and they'll be asking questions. So they'll ask, Fewer questions, maybe more pointed questions, but you'll get answers either positive or negative. And frankly, negative outcomes are not that bad in those situations because, A, you get an answer, and B, you can move along. And both of you can move along. The investor and the company can move along in a positive way. Well, thanks for your time. We're not interested because of X, Y, and Z. But you've presented yourself in a way that's able to be repeated and so you can get better at it.

And you've had the— and you've taken the time again to do— it's the reps, right? You've done— you, you're doing the— you're, you're doing the process. You are following— you are, you are, you know, maybe football is a better analogy for this.

10,000 hours, right? The 10,000 hours that, that Gladwell talks about all the time. Look, that's so true. I, I know I spent— I drove by my home, my hometown court playing basketball when I was young, when I was younger, and I was like, I think I took I think I was 10,000 hours at basketball, not in the NBA now, but that's another whole story. But you practice and you have to get better, and it really does work.

Yeah. And again, you've got to know the steps, right? And so one of the things that's been popping up for us lately, for one reason or another, is this thing of knowing when it's time To go versus grow.

Yeah, it's good.

Great.

I love that.

It's like, so it's the, remember that Clash song, John, right?

Should I stay or should I go?

Right. That's the whole thing that there's a pervasive moment, crossroad moment that every founder will eventually come to. Right. And that, and if you were paying attention as the founder, then you're going to see that there is an opportunity before you. And again, you are, you, every founder hits it, the crossroads, right? Growth is possible, maybe even probable, right?

Right.

But the burnout is starting to, is, is starting to be there as well, right? So you're thinking, do I double down on this thing right now and scale this thing, right? And, and how do I even go about doing that? Or is it time now to step back and should I think about maybe what I wanna do something else or? Or, you know, looking at stepping back in a way in which I, you know, I'm moving towards exit or something like that, right? So I think what we'll talk about today, and again, is, is, is the telltale signs that you're at this decision point, okay? And then what you should do, right, to figure out what do I do next, right? What's right for me? What's right for the business? What's right for the legacy that you want to have, right? Whatever that is. But this is the— this one is for the owners with, with who say you're having some success. You are, you've got a lot of equity potentially, right? And you got a head full of questions. And so today, let's, uh, let's talk about this crossroads, right? What, what to do at this crossroads. Should I sell or should I go? How about this? Should I sell or should I grow?

I like that.

All right, so that's what we'll— that's what we're gonna call it. So, should I sell or should I grow? So, first kind of thing to talk about, I think, is that, again, it was that what— how do you know You're there. So, John, you've been through this. What are some of the signs that you have hit this kind of like you're at this point? What are you seeing as a founder that is making you think, hmm, I'm at this crossroads?

Yeah. I mean, the thing that happened to us was we got to a point where we had the employees, we were hiring employees, and we had just reached the limit of our ability to grow. We got to $7.5 million in sales and we couldn't seem to grow over that plateau. And we— it wasn't a— it was a— it seemed to be a limit of every time we'd gain a customer, we'd lose a customer. And we weren't, you know, we were working too much. Like, I was working, you know, 80 hours a week or whatever it was, getting called in on Saturday nights to fix technology. And we had We didn't have enough systems and tools in place to help us scale. So we were at the point, we were really at the point of that, of the Clash song. And we were like, man, should we, should we look to sell this thing? And it was way early in our, in our, not way early, but we reached that level pretty fast. And we sort of stepped back and said, you know, do we need to sell? Do we need to raise money for investment? Do we need to invest in technology? And that's the third one is what we ended up doing because we didn't want to sell. We knew that we got the sense that we could grow more. We just didn't have our act together enough in order to scale. And because we didn't have underlying systems and tools, we were relying on the strength of our people to get things done. And you can do that, but we've talked about a couple of things in the past is people, process, and product, right? We had a great product, we had really great people, our process was terrible, right? And by process, I mean systems and tools and technology in order to make people more productive. So You know, it's like a waitress or a waiter at a restaurant, right? They handle 5 tables wonderfully. You give them the 6th and it all falls down on all 6.

Everything falls apart.

Right. It's not as if just that 6th client is not getting their calamari early. It's the water isn't being— nothing's happening at all 6 tables because he or she can't do 6. So that's the way we thought of it is let's make our— let's invest in technology To make all those people more productive.

Right. So it's an interesting point because the thing that I came across in our situation when we went to sell was that we were— it was fatigue. So a lot of us, we had spent, you know, a decade, right, kind of building this thing up. And again, it was a digital marketing agency, you know, and anybody who's in the agency business, you know, or any kind of professional services business, I'm sure You, you know what it's like that you are working a lot. You're not spending a lot of time with your family. You're traveling, probably. I was anyway. I was constantly kind of out and, and, and, and working until 8, 9 o'clock at night. I'd come home, cook dinner, do whatever with the kids, and then go back to work for 4 hours until 1 o'clock in the morning and then get up at 6 and do it again. Like, it was, it was a, it was a, you know, it was a, uh, it was a grind.

Right. I was gonna say grind.

Yeah. It was a grind. And again, look, stuff was great and it was going well. We were making money and we were, you know, and the Christmas bonuses were awesome and things were really good. I mean, it was, you know, it was the best of everything that had been in my life at that point, you know what I mean? So not complaining about it at all, but it is a reality to deal with the exhaustion, the emotional fatigue, right?

Yeah.

And that's different than a strategic inflection point. Right? Where you basically have said, okay, look, like your situation is like, look, we've got a situation here. We can't grow past this and we're going to need to invest somewhere and do something to be able to do that. Our situation was, no, I think what we have to do here is we have to basically— now look, I will also say that we were lucky because we were at a point in time and in history where what we were doing was incredibly valuable. And so we, the only reason while the emotional fatigue was happening, We had no plan, right? So the emotional fatigue was happening. And then what happened is then people started to come out and start to say, hey, look, yeah, we're thinking of that. We're, you know, we're in acquisition mode. What would you think about maybe doing a deal for your company? Because we like what you're doing with social media and all this stuff. And it was all be all that, right? And so, and we've got some big clients and things like that. So the emotional fatigue started to happen and then we started to get Right. We started to see these people come across the fence. And so that's where the decision point came, was because we were all feeling like, have we taken this as far as we can go? And I think that everybody kind of felt like, yeah, like maybe there's other things we want to do. Maybe it's just a matter of saying, look, this is what you do when you have the opportunity to do it. You know, a lot of it was that.

Right.

But we were— but it was fatigue. And so What we're trying to point out here is that, again, guys, look, that's just 2 stories, right? But you understand that basically this is the kind of stuff that happens to everybody. One of these things will happen to you, right? The other thing that will happen to you, again, is just the fact that maybe everything's humming along fine and out of the blue you get an email saying that there's an interested party in basically talking to you about a potential acquisition, right? Sometimes that's the first sign. Where you go, oh, I could sell this, right? This is right.

This is real, right?

This is the thing that could happen. I never really considered it, not, not yet at this point. And that's when you start to go, all these other feelings and other things start to kind of pop up, right? So now you're like, yeah, am I tired? Now you're suddenly like, well, you know, I am kind of, you know, I am kind of emotionally drained by this. Oh yeah, you know, I am. We're working too much. Yeah, you know, My wife would like it if I was home more. Yeah, yeah, yeah. I would love this. I have this strategic inflection point that's going on here or whatever. So these things start to become recognizable because you see that there's actually potentially an answer.

Yeah. And the other thing that goes along more with— and I had the sort of emotional side too— is I started all sorts of things when we were selling our company too. I started a relationship with my now wife. I started to go to graduate school at the same time. So I was doing like 3 different things at the same time. And I think that was a function of me trying to not deal with the stuff that was in my day-to-day and branch out and look for other things. So it's like, it's like when you have, you know, you have a problem, you have a problem with your tooth and you want to avoid it. You don't want to go to the dentist and you're like, ah, like, I'll do something else or I'll focus on something else. It's like, no, I, I, you reach out to other things and, but, but that's, that's not dealing with the problem at hand.

No, that's an excellent, excellent point. So again, you know, the idea here, guys, is that how do you know you're at this crossroads, right? And again, the, I, the way you know it is because you start to have existential crisis.

Exactly.

I mean, that's, that's it. I've got, by the way, I've got a whole series on existential crisis on TikTok if you want to check that out. But, um, have been there, um, you know, a couple of times, and it sucks. Um, and it's not— look, it's not over. It's not too much to talk about that just for a second right now. So understand that when you, as John just pointed out, okay, there will be signs, okay? And your own body Okay, we'll start to tell you these things, right? It will tell you you're tired. You'll feel tired. And again, as an entrepreneur, I'm sure you feel tired all the time, right? That's something you've just kind of grown accustomed to. So that's not a great red flag anymore because you have basically just— it's all just the same, right? The strategic inflection point could be real because, again, you could— that's something that you could pop up and really notice in your business, right? As John did. Wow, we just can't get over the $7.5 million hump. Why? No matter what we do, why can't we do this? What are we doing wrong? What's the problem?

Blah, blah, blah.

And again, that can be partly emotional, but again, it can— but it can be slightly strategic. It's like, well, what do we have to do to change this? And as you pointed out in your situation, it was like, well, the reason that we can't take this more business on is because we don't really have the back office support to be able to do it, which is— we've got a whole episode, a podcast episode just on that. And look at the systems that you have to have in place to be able to actually Scale is obviously important. That's a whole separate topic. But for right now, being able to understand that you have that that these things are that you hit these things and recognize them. Okay, and all we're saying is recognize them. Okay, and then what do you what are you going to do next? Right. Perfect. In the perfect situation, what you're going to do is you're going to stop and you're going to raise your hand and you're going to ask for some help. Okay, and and why? Because This potentially is the time when you start to say, hmm, what do I want to do with my life next? Where am I? In John's case, it was like, look, you start to go and you start to explore these other things, trying to find the thing. We were talking about coaching before. The reason I got into coaching baseball early on, before I even had kids, was because I was disenfranchised with my work.

You know what I mean?

Like, that honestly, that was why I started— wanted to— why I wanted to be there doing that. I was getting— I was feeling fulfillment out of that, and it wasn't fulfilling fulfillment out of being a copywriter at the time.

Yes. Some people buy a car, some people go out and take a— buy a second house, or some people, you know, divorced, some people go find—

right? This is the— this is real. Like, this is real. And what we're trying to point out about, uh, what I want to just point out about real quick about, about existential crisis is that this is the, the way we deal with it. So the existential crisis, and in this case potentially is the universe, whatever, trying to warn, right? Trying to give you a sign, right? Trying to shake you, right? Hey, hey, what's— what are you doing? What are we doing here? Okay, it's a, a message from your, from your higher self going, what, what are we doing? What, why, what's happening? Okay, you're not, you're not fulfilled. You're not doing this right. You, you feel like you have to keep doing this. You have a business. You you're employing people. You have to keep making the money that you're making. You have to keep this thing going. You have to make sure that you're paying all your employees and that they're fine, and blah blah blah. You've got families involved. Oh my God! The pressure. Okay, and the pressure of having to keep this thing going and keep this thing going or whatever and everything, and you're getting different pressure from different ways. I'm not home enough. You need to come home more. Blah blah blah. Been there. Okay, you know, getting the phone call at 5 o'clock every night, when are you coming home? It's like, just like last night, probably like another 3 hours. Like, right? But so again, we, we feel the pain, but understand that what this is, is a, is a warning sign. Okay? And what we're trying to get you to see is that if you start to feel this way, this is the crossroads, right? Telling you it's time to sit, step back for a second. and think about what is the right way forward. Okay?

Yeah.

So, getting that, getting in there, anybody who's had that whole thing, the first thing I would suggest is that you pick up the phone and you call us. Call somebody. Okay? We've all— we've been there. We know exactly how you feel. I'd be happy to just walk you through the existential crisis if that's what you needed. Okay? Just so you know. Right? Email me, Joe, J-O, At myexitengine.com anytime. The this is a real thing, and so understanding that, and before you go out and buy the car, and before you go out right and ruin the marriage, and before you go out and blah blah blah and everything else, okay? Step back and understand that what's happening here is that this is a this is the crossroads, right? Rearing its ugly head. And again, any like any crossroads, there are different options. Okay? So let's talk a little bit about what those options are next. Okay. Because now what we've said is, okay, I've got the— I'm at this point. Should I, right? Should I sell this thing or should I grow? Yep. So let's talk about growth.

Yeah. And, and the growth aspect is right after you've taken that break, after you've talked to somebody, after you have decided that you're not gonna go, you're gonna grow. What do the people who you're eventually gonna sell the company to, what do they want, right? So you need, in my case, we stepped back and we invested in technology. We invested in technologists and people that could help us scale. Because what investors wanna see and what your ultimate goal is, eventually you're just putting off the sale for a time being so you can make more money from this eventual sale.

Yeah.

But what investors wanna see is they want to see growth and they want to see scaling. They want to see— they don't mind if you take a pause or you have a problem and you solve a problem. Everyone has problems. There's very few stock prices that go like this, right? There's very few trajectories that go like this. But what they want to see is that you thought about it and that you've invested wisely in systems and tools that can make your employees more productive. Or your systems and tools and your product more resilient. And making sure that you're doing the right things, right? Like when I was— and I'll tell a quick story about my company— is I was the one that was going into the office on Saturday night to deal with the Cisco rep when things went sideways. And not because I was an IT person. I didn't even play one on TV. I wasn't even good at it. But like, I was the one that people called when there was problems in New York. We had New York and Chicago.

The buck stops here. Right.

Yeah, and I solved all the problems in New York just because I actually lived in the city and our office was in the city. But, but, um, but the point was that wasn't what I was— I shouldn't have been that person. I wasn't in the trenches. I needed to be more a leader and needed to step back from the business and invest in it and hire people to do those things who actually knew what they were doing, not like literally plugging in wires and making mistakes. So, so again, What investors want to see is that you've thought about things and you've invested and you can tell the story about, oh, what happened in 2005 was X, Y, and Z, and this is why our sales dipped, but we went on a trajectory after that.

That's it. And again, the reality is it's about identifying those areas where you can grow, right? And so lots of people also have situations where they already know how they want to grow. Right? And if they ever had the opportunity to grow, they would do X, Y, and Z. If I had the money to do X, you know, this, we would do this, right? And so the capital question becomes, you know, a real, you know, clear and present, right?

Yeah.

So, you know, you gotta say is that, so the first thing is identifying where it is you can, you know, where you can grow. How do you scale from here? How do you take this $7.5 million point that you're at, right? And basically invest in technology that helps you basically uncover another $3 or $4 million in revenue. Right? What are the ways? But it's not just about top-line revenue either, right? It's also about potentially about, as you pointed out, stepping back and making sure you've got a team in place. Sometimes your scaling happens because you add people, right?

Yeah.

Sometimes, lots of times, and, but like almost always, your scaling requires you to have the systems in place to be able to do that. Okay?

Yeah.

And so again, the systems are gonna vary from, you know, from, from business to business and industry to industry. But, um, you know, we are— last week's, literally last week's podcast, okay, was, was, was specifically kind of like on this. And, you know, we talked with Reuben Shears, right, who was our one of our partners and who helps us with our systems and stuff like that. The systems question of building the systems so that then therefore you can handle the business and all that stuff should have hopefully happened even before this point, right? But, but, but often it doesn't. And so Now you're in a situation where in order to scale, you may have to invest again in technology, in back office. You may have to invest in a person to be able to help build those systems for you so that you can handle more volume, so that you can do more business, whatever that is. You may have to invest in other equipment if you have— if you're in manufacturing, or if you're in a situation where, where you rely on equipment and things like that, you may need capital to be able to invest in new equipment, right?

Yeah.

Yeah.

Yeah, we talked about productizing, you know, in that discussion, talked about productizing your service. And that's exactly what we did in the case. And a lot of companies do that, right? They take a subscription service or they take a consulting service and they productize it and they develop a product. And what we end up doing is developing a product to, A, serve our clients via that product, and B, appeal to people where we could just give them the product and they could look up information, right? So it served 2 purposes, and that's what we, again, ultimately ended up doing. So it killed 2 birds with one stone. It opened up a new market for us, like for low— the people that couldn't afford our consulting services. And B, it allowed us to serve all the information in one product so we could— this was way before big data, but this is— we had our CTO, and this was not me, but our CTO had the vision of like, imagine if we could aggregate all this information, if all the information instead of being in spreadsheets and PowerPoints, was in this system that we can then analyze across industry and across, across the whole company and do trends and get in the news. And it was, it was part of a bigger strategy. But, but that's what the, what the strat— what the ultimate outcome was, was we became a product company. And, and it was sort of an amazing transformation of like, OK, when you're a product company, How do you think differently? How do you invest differently? What are we going to do in the future with our budget? So like, once we did this, it changed our whole budgeting thinking of like, oh, we need product managers that are responsible for this. Kate was responsible for building this product and being the one that would take questions and take enhancements and all those things. And we built this core product for ourselves that was completely owned by us. It was an incredible transformation.

But I mean, that's, but that's, that's kind of what it takes, right? And so the reality is that, again, it might not be that it's a system. It might be people, it might be systems, it might be productizing, it might be, right? It might be new marketing things.

Yep.

It might be new markets, okay? Places that you haven't gone. But, and, and, oh, oh, oh, and by the way, growth also might happen through acquisition. Okay? So understand that one of the, the ways to grow quickly, okay? Especially if you're in a scenario where you're like, look, I got 3 more years in me, right? You may say, hey, look, I think I can do this for another 2 years, 2 or 3 years.

What—

how can we grow and maximize the value of this thing as fast as possible, right? And one of those ways to do that is to grow because you go and acquire someone before you are acquired, right? We talked to Eric Goodstadt, our agency buddy, a few years ago— a few weeks ago. Right, a few episodes ago. And what he was talking about was the work they had to do to acquire people before they got to the work of actually selling themselves, because they knew that if they could be more complementary, if they could be more, if they could have more capability and more market share, that they would then be more valuable, right, to sell. And so that's, that is also one way, that's a very common way For people to be able to kind of take that, that growth scenario and kind of see it, see it forward. Remember, guys, that no matter what level you take, there are some simply some low-hanging fruit here to make sure that you've done before you even try to grow any further, right? Which is to basically take an inside look at yourself, right? What's your team like? Do you have a management team in place? Okay. Do you have the systems and the standard operating procedures and things like that written down and all that stuff? Okay, do you have leadership that delegates to you know to to underlings well and things like that? Do you have a good leadership team? Do you have you know people that are too close to the are you as the as the founder too close to the daily daily operations of the business for your own good? Things like that, right? So those things are always going to exist. But when you're trying to figure out a growth scenario, the thing you want to be able to do is to figure out again is that what what do investors and buyers want before I scale? Identify what that scale could be, identify the team, the systems required, etc., to do it, try to figure out how much capital you'll need to do it, right? And then, and then go and see it through. Okay, so plan it just like anything else and then execute it, right? The, the idea here is that, again, it's hard to do it by yourself.

Oh, and some of the best, some of the best discussions we've had, and we did like offsites, we did Dinners. We did extended afternoons often. This doesn't— again, you don't need to go to Cabo San Lucas to do this, right? You don't need to go somewhere crazy. You can take a day off on a Friday and do this effectively. And it's okay. Like, we used to call them blue sky meetings, and I did them at publicly traded companies when I was there. You can take your team. I mean, those are the people that really know the business and the people who understand the business. You can get some outsiders too. But like, take your team and within your company, within your small company, this is a very small company, you have incredible knowledge about what, what your clients want. And you can take that and make the growth scenario real, right? You can put plans together and get ideas and get brainstorming ideas to how you're going to grow and what's the best way to do that. Don't, don't think, you know, you can certainly call one of us and we can certainly talk to you about it. We'd be happy to participate in those things, and we've done so. But like, don't neglect the people within your team that have intimate knowledge of your clients, customers, and processes that can, that can help you scale and grow.

And again, the decision about what to do can and should, should and, you know, could and should involve, you know, your leadership team, right? Where are the places we can go? You know, you sit them down and say, guys, here's where I am, you know. Feeling like this is the thing, I need to remove myself more no matter what, right? That's always going to be good. But if we're going to decide, make this decision, let's get everybody in a room and try to figure out what are the ways we can grow first and then come back to the next thing, which is, you know, potentially either what happens when you're discovering how to grow, right? You might go, yeah, that's a lot of work. And you're making a personal decision about whether or not you've got it in you. Right? You might, again, your access to capital will be an issue, right? Will just be an issue one way or the other. You might have great credit, you might be able to get capital, you might be able to get investor relatively easily, whatever. But at the end of the day, so that those things could help decide for you, right? But let's talk real quick about what happens. We talked about grow. Let's talk about selling or going, right? What does it look like to exit on purpose? And so now you're in a situation where you're saying, hey, look, all right, I don't have it in me, or I don't have the, you know, there are some things that are missing here, or I don't have areas in which I think I can grow, or any of that stuff. What, what does it look like now? So my decision is, well, we've looked at all the stuff and I don't think there's a way that I can grow here. So now it looks like, you know, can I exit? Right? So whether it's a soft or a staged, you know, what is, what is it, what does exit look like for me right now? What are the things that I need to know to prepare that, right? And we've talked about that like 100 times already, you know, on this podcast and others. But the idea is that now you're in a situation where you're trying to— what you're trying to figure out is, A, first of all, what is it that you want at the end? Start there, right?

Yeah, because if you don't, if you don't have an idea of your goals, right, we have— we did this in our webinar, and we have a great slide about this on our webinar to say, like, look, you need to figure out— if you don't know where you're going, How do you know when you'll get there? Right. And that's a good way of saying, like, look, does this have to be a novel? No, it needs to be a one-page document where you say, here's my exit goals. Here's what I want. Here's what I want to do. Here's the money I want. Here's the situation I want. And here's the life I want. And once you have that down, then you can, you know how to get there. Then there's a, at least you know where you're going. And you can say, okay, well, I need— in order to get X amount of dollars, I need to do this. I need to look at, at this type of buyer, or I need to talk to my clients. I need to really be out there and converse with a couple of business brokers. I need to call someone at ExitEngine, um, and Exio and talk, talk to them because they deal with this all the time. We have these phone calls all the time where someone is— again, someone's exhausted. Usually we get a phone call or a text. And they're exhausted and they're like, I just want to get out now. And when you have that attitude and you want to go, you're not going to— and you're burned out and that becomes clear in phone calls, you're not going to get the most amount for your company. So we counsel people to be like, look, step back. How can you prepare your company for sale? And again, we've talked about this a million times, but it's really important to think and say, do I want to sell to a strategic? Do I want to stay here? And all those things depends on What's on that sheet of paper that you've written down?

No question. Exactly right. To be able to say, what does my life look like at the end after this? And where do I go? What do I do next? And again, it depends on your journey, where you are in your life. All kinds of things can do that. But make no mistake, there is still work to be done. Okay? So the reason that you're making this decision and you're at this crossroads is simply one of the biggest deciding factors is how much work and for how long. Is it gonna take me to get to where I'm satisfied with what the outcome is? Right. And again, we can help you set up this situation. We've got a tool called the Value Acceleration Calculator. What you can do is by— we can show you with about 9 inputs, John, 9 pieces of information, what your value is right now and what it could be if you could push a couple of levers.

Right.

Yeah.

And what we do is we put that information into, again, into our spreadsheet. You want to grow by this, you want to— you have this much revenue, your, your cost of goods is X or Y. Okay, this— these are the 4 things that you can do to get your company prepared for sale.

That's it. And the reality is that they will show you basically the, the level of effort and everything that you need to be able to know that. And again, you're making decisions, okay? Each one of these things that we're telling— talking to you about is a decision, is a— is, is information you gather So that you can make the decision, right? And the idea is that, again, you may look at this and go, you may— doing the exercise of figuring out what the value can be does 2 things. It helps you make the decision in one way, right? So in one way it says, oh, I didn't really— I'm worth this, I could be worth this, and if I just do this, this, and this, I can be that. So that's the kind of thing that opens people's eyes. First of all, right? But the second thing is it also may say, hey, look, I can't get there. It's gonna take me 3 years or 4 years to do that, and I don't have that in me. Here's my value now. And if I just did A, B, and C, did a little bit of work on making sure I'm removed, did some— make sure I had some back office, my team is decent, um, you know, whatever. I've, I've optimized everything I can as that exists internally right now. And probably have some ideas about what the new owner could do in the future. All good, right? So that now says, now I can, and I can live therefore with being at this value, right? And taking this much money and in this kind of deal and this stuff that would be fine. And by the way, I'd like to stay on as a consultant for as long as I can, or I'd like to stay with this company and just be an employee of it.

I'd like to be the product, the one we like to be a product manager, which is sort of surprising when we had a client We had a potential client who was like, I want to sell my business, but I want to stay on as a product manager. Like, okay, like, great. We have— funny, we have a buyer that wants to do that exact thing, which is, you know, talk about serendipity.

It's great.

So, right.

Those are the kinds of things. But again, you've got to get clear on that stuff. And so what we're trying to do is give you a framework for getting clear, right? That's not taking Scientology aside. But the idea is that, again, these are the decision points. This is very common. And again, all we're doing is helping you just kind of walk through the decision process, right? And again, gathering information helps you make the determination, okay? None of this is gonna happen overnight, right? So the reality is that you're not— even if you decide you wanna sell your company tomorrow, you couldn't sell your company tomorrow, okay? It's gonna take you 6, 9 months on the outside to be able to prepare your company just to be able to be in front of somebody. Okay. Um, but, but again, the, the, you may have gotten emails, right? We talked about back, back at the beginning. Maybe you got a, maybe you have somebody right now who is interested in you. There's nothing wrong, okay, with, with taking a meeting, right? Take the meeting. Find out what it is they're, they're after. What do they want? What do they—

What do they like about your— Why'd they contact you?

You may not— it may— you may be not even be a good fit from the beginning, right? You may go— they may have the wrong guy. I mean, it's very possible because a lot of these guys reach out very blind and very cold and have no idea who they're even talking to and all that stuff. So the first step is like, yeah, let me hear you out, right? What do you have to say? Oh, well, I'm a so-and-so and I work for, uh, you know, I'm a business broker or whatever, or, or an M&A person, and I work for a company that's looking to purchase companies, blah blah blah. We do this all the time. Um, or I'm a private equity— I work for a private equity firm and I'm interested in this particular thing. And what this is, where the stuff that we invest in and what we're trying to do is buy companies that do X, Y, and Z. And I'd love to be able to talk to you more about what you can do. And so that's the point. Take the call, right? And then the next thing you do, the very next thing you do is you call someone like us.

Yes.

Okay. Doesn't have to be us. We're not here to, you know, self-promote. I hope you, you will. I'd like you to, but if you don't, that's fine. Call an M&A lawyer, call a business broker, call somebody who can help you make sense of what they are saying, what they're offering, what they're all about, especially if you think it's something that might be good. Okay, if you know out of hand that it's like not the right thing or whatever, dismiss it. That's fine. At the very least, what it's done for you though is made you realize that, oh my God, this is a possibility, right? So the next call you should make is still to us. Because you should— the next call you should make is go— is to say, what should I do here? Should I stay? Should I— right, should I grow?

Yeah. And, and these scenarios are, right, roll-up strategies, right? They're, they're rolling up all— they're rolling up HVAC companies, roofing companies, plumbing companies. Then insert your industry, and it's probably happened, right, is happening, or will happen in the future, right? And the idea is Get everyone on the same system, right? Systems and tools again. Get everyone on the same system and scale this thing out either geographically or vertically and integrate everything into one system. And with the thinking that with economies of scale that they can roll up businesses and gather their revenue and increase their profits. Or it's a strategic buyer or it's some other type of PE buyer, right? There's All sorts of strategies. There's search companies that just go out there, as Joe mentioned earlier, and, hey, we're looking for HVAC companies, and then they go find a buyer for it. Now, those are less desirable sometimes, but when you get sort of— when you talk to somebody and you hear their strategy, like, we've very likely seen it or heard about it or dealt with it recently when we talk about roll-ups. So we know the questions to ask and the ways to navigate you through that process. You're an expert in doing what you do. We are experts in doing what we do. And we hear about these sort of new, innovative approaches all the time. And sometimes they're not new and innovative, but they're tweaks on things that have been around for quite some time. So I encourage you, again, as Jo mentioned, reach out to us if and when this happens.

That's it. So now you've got— now you have your, OK, this is where I am. This is how to recognize the crossroads, right? And as we talked about, maybe there is a You know, there's an existential crisis that's also going on at the same time. It's all related. Now I can identify where I am, what my issue is. I realize now that this is a crossroads. And so now I'm going to basically bring the people together. I'm going to go and figure out which way I should go. And I'm going to gather as much data on that as I possibly can from all the people I possibly can. And then you're going to make the decision. And the decision, by the way, The decision we always recommend to people, okay, is to go down the path of growth first, okay? Because the act of preparing yourself for growth will also at the same time prepare you for exit.

Yeah. And, and, and along that journey, like Joe said, along that journey, you will get to a point you will improve your business. And when you— if you do get to the point to say, I do want to sell, you will make your company that much more valuable because of the conscious things you've done to grow it. And it seems sort of counterintuitive, like, wait, why would I want to invest in a business that I want to sell? It's like, no, no, you must invest in the business you want to sell because if you're selling the business, you have to think from the buyer's perspective. Do you want to, you know, would you ever want to buy something that's broken, right? You don't buy something that's broken. You don't buy something that is is screwed up in any way, shape, or form. You want to buy something that someone has consciously thought of and said, oh, there was a problem and we fixed it. And almost you don't even want to hear about it. You're like, of course you invested in systems and tools because, you know, you want to be able to sell it for the maximum amount possible. You don't want people to poke holes in your business or your business model to say— you have to think like the buyer, basically.

That's right. As you get down this path, you know, and that's why our process always is our kind of like discovery and our diligence first approach, right? Our way is always to come in first, look at the— examine the business as a buyer, okay? And determine again where it is the buyer would say, hey, there's a deficiency here, right? Things that would basically be reducing your value, right?

Yep.

But when you do that first, whether you're growing or selling or whatever, right, you are making the business better. And so, one of the things that we haven't really touched on here, and we should just circle back real quick, is to say, hey, look, sometimes it's about getting capital to grow. And the process of setting yourself up to look as attractive as you can to someone, to capital, whether that's an investor or even debt financing, to be able to do something, okay, is exactly the same.

Yeah.

So, the point is, is that what we're saying is that get your— you don't have to make the decision Right? You're at a crossroads. But here's the good news. You don't have to make this explicit decision about to grow or to sell on day 1.

No.

Right? You don't.

You have—

you get— go down the path of getting yourself— of discovering your growth, discovering how you can improve the business, increase the value of the business on its own, right? Then start to explore growth areas. And now in the meantime, what you've done is just— you've just made your business That much more healthy and sustainable and that much more sellable. So you'll always, as you go down the path of growth, you should always be able to be prepared. That's your preparation, right? And then when opportunity comes along, right, you're ready to go.

Yeah, because we're not— right, you never know. Like, as you prepare for growth and, and you, and you're looking to sell the company, maybe you go down a path of selling the company and you're not getting the offers that you want that meet those things you wrote down on that piece of paper. And you say, okay, well, I'm not making— I'm not getting those offers. I will go back to growing the business and trying to sell it in a year. Well, in 4 months, you get another call that completely changes. And so, you know, by consistently improving your business and by growing your business, all you're doing is creating more options for yourself down the road. Whether you grow it for 2 years and invest a ton of money in it, or you grow it for a year and try to sell it, You're positioning yourself better to achieve those goals you've written down.

No question about it. And I think, again, it's, it's, again, let's, let's start by giving yourself right now some actionable things. Okay, John? So for right now, as you, as you sit here and listen to this, start asking yourself, there's like 4 or 5 questions you can start asking yourself right away. First, what is it that you want your life to look like in 3 years? Okay, so Use 3 years. And the reason we use 3 years is because generally speaking, it's going to take you about that amount of time to really do a growth stage in a real meaningful way if that's what you wanted to do.

Okay?

Because you need time to be able to plan it. You need time to execute it. You need time to see the results. You need time to change it again, right? Test, optimize, scale, blah, blah, blah, right? So what do you want that— what are you expecting? Where do you want to be 3 years Now, I want to be on a beach. I want to be retired. I want to be on this other business-like idea I've got. I want to be a baseball coach, whatever. Okay, get those things out first. The next thing is, am I— ask yourself this, and this is a really hard question, Joe. I ask myself this every day. Am I the best person to run the company at this next stage?

And I, and I, and I love that question for a number of reasons, and it's almost like the question that I sort of rephrase it in my mind of, not to get negative about it, but like, if there are problems at the company, how much of a percentage of I am of the problem, am I of the problem, right? And that's, it's two sides of the same coin. Like, are there other people here that can run this better than me? One, because I'm, for whatever reason, right, they're more, they're more skilled. But you have to ask this question. It's really difficult. Because that's what you need in order to achieve your goals. You don't need to be the CEO, the chief cook and bottle washer, the one driving the company. You own the company. You might not be the right person for this stage of the company. You got what got you here will not get you there. It's our famous phrase, but you could— you might need a different role in order to get you to the next step.

And, and, and again, what you bring to the company is valuable. Make no mistake. We're not saying by any means, right, that you're like, like not capable or whatever, right? That's not what this is about. This is about you looking at your baby, okay, and going, what's the best way to put this? What's the best way to drive this thing forward so that I optimize its value to, to me as the owner? You can decide to not do anything, right? You can decide to say, no, I just— I'm just— everybody else does the work and I sit there at home and collect the checks.

Right.

Like, you're allowed to do that. Like, that's— Yeah.

And the answer to this question very might well be yes. Right. Very. But you need to ask it. Like, the default— by not asking it, you don't think about it. And again, what we've talked about throughout this podcast is You need to think. This is a time for thinking when you're making these critical inflection points. This isn't a time for doing, which is— it was what everyone on this podcast probably defaults to, is doing things, doing things. No, no, this is time for, for thinking and pondering what the future is.

Take a, take a week off, right? Go do something nice, whatever. Go get yourself to a place on a beach where it's quiet and whatever, and really start to— and with a notebook and a pen All right. And start thinking about this stuff. What do I want my life to look like in 3 years? Am I the best person? Am I the best person even at the company right now? Okay. To run this, or because obviously there are always people better out there somewhere, right? I mean, that's the, that's the thing probably. But am I the best person to run this company at the next stage, whatever that is? Okay. The other thing is, ask yourself, What would I need to feel? What would I need to have happen or see? What evidence would I need to know that I felt really, really ready to sell? Okay. Because again, I think people are like, there's one thing is the money. Okay. And there can be all kinds of reasons behind that, right? Some of them are good. Some of them are not, right?

Some of them are healthy. Some of them are not.

Correct.

Exactly.

So what would I really need? Would I need a large pot of money waiting for me at the end? Would I need to make sure that I knew what I was going to do next? Would I need to make sure that I could get a job and stay here and work here, whatever those things are? So, what would you need to feel that you were ready to sell? And it might be that, look, you might say, you know what? What I really need to feel ready to sell is that I really need to feel like I don't want to do this anymore, and I'm not quite there yet. And that's good. Because again, that's a good sign that says, okay, great. So maybe you're not ready to sell. Maybe this is now pointing you down the growth path instead. Okay. And here's one more that I think is really good. And John, you may have a couple more. If I will ask yourself this, if I walked away right now, what would I regret? What would I regret not finishing? Or what would I regret not doing or not achieving? What would I regret if I would look back on it and go, oh man? Now that's a hard question to answer sometimes because again, sometimes going through the process of selling itself would make you regret the entire thing. So it's what we're— but what we're really asking you to ask yourself now is if you walked away from your business the way that it is right now, right, what would you regret not finishing or not getting it to do? What, what place?

And then the analogy, you know, and this, this can take the form of many things, right? But if you think about it, like an example would be, you know, you're building a product, you're, you're expanding into Nebraska, you're, you know, changing your suppliers, you're doing some large business change, right? You're pivoting your business. Like, you know, it can be difficult to sell when you're pivoting your business. But But is that going to wear on you after you sell? Either from a— is it going to hurt your pocketbook in your wallet, or is it going to hurt your ego? Is it going to hurt the perceived legacy that you want to live? You know, I want to leave my name on the trucks for 5 years. That's something we've heard, right? That's something that's come across in real life. Like, it's the reality of it. I want it to be Kniff and Kniff Painting Company. As in a local example, someone I talked to recently is like, no, no. I want that on my— I want those— that name on my van for the next 5 years.

Even though I'm not— even though I no longer own the company.

Even though I no longer own the company, right? It's like that. I want to see the vans driving around my neighborhood. And it's one of those things, it's, you know, you need to get— you need to square that with your brain because, you know, if that's gonna cause a regret and cause a problem, you don't want to have that going into it. You don't— you want to know that And you know you can solve it, and then continue to proceed with the transaction if you can avoid it.

That's it. And the reality is, again, it comes down to, you know, being able to, again, identify these things and know where you are. Ask yourself some, some real hard kind of probing questions, right? And be able to— and feel how you— and notice your body. Notice how you feel when you think about these things. When you think about— and we don't want to get— take this podcast in a whole other direction, but just, again, this is just important stuff that it's becoming clearer And is clear to most people who have been successful from a business standpoint. They are more in touch with their emotional intelligence and things like that than you realize. The reality is, is that if you are able to ask yourself these questions, notice how your body feels when you listen to that, when you feel the answers. Because if your answer is, you know, something that you're— where your head goes, oh yeah, I got to stay here because I got to protect these people. And then you get a feeling of a pit in your stomach when you think that, that's right. That's your bad cheer, right? That's the time in which you got to say, okay, my, my Spidey sense is going off. And the reality is, I don't like the way I feel when I think about staying here.

Right?

Yeah.

And, and, you know, we were talking another, another time about not sleeping, right? If you, you know, if you have change, if you, if it's, if it's your Spidey sense, or you stop sleeping, or you stop exercising, or you're eating poorly, you're drinking more, or whatever it happens, be. Those are signs that something's not quite right, and that's your way of your body and the world of telling you that, hey man, you gotta— you might want to rethink this path you're going down.

And the answer is, again, you don't have to do anything. You just have to slow down, okay? You got to take a step back, take a couple of days off, start to think about where you are and what's happening here. And again, please do this before you go buy the sports car and before you get the thing on the side and all that stuff, okay? If you can, it's just, just trust us, right? Be, be the person who basically is, you know, who, who listens to what, what they're being, you know, listens to what the signs are, are saying, right? And so imagine yourself that you're walking down this path and your business is a path and you're walking down through the woods and the whole thing, and then you come to this fork. Okay, and the fork is that one way is the ability to be able to continue down and make this company more valuable in a specific period of time in a specific kind of way, or the other option is to be able to get your stuff together and be able to get as much as you possibly can for this company right now, right? No matter which way you pick is okay, right? Whether you grow or you go, guys. Just do it on your own terms.

Yeah, and do it. And again, you know, when you come to a fork in the road, the old joke is you take it. But it's true in the sense of you got to go one way or the other, right? You got to go. And by going down the path of choosing growth, it doesn't mean you can't go back and you can't go back and sell your company. So again, the lesson here is don't get stuck at the crossroads just because you need to make a decision. These decisions are like, I think what Bezos calls, these aren't decisions that they call one-way door scenarios where, you know, you go down one path and you decide to sell the company and then you get down and be like, wait, I think I want to keep this. Or the exact opposite. I think I want to grow this company. Oh wait, no, I want to sell it. You know, those are scenarios where you walk down that path, as Joe mentioned, and you're doing things that will ultimately lead to you improving either the growth of your company or improving your company so that it sells more quickly so you can achieve those goals.

Exactly right. The beautiful thing about all this is that the general processes are basically the same. All right, and so to be able to go through this work, to be able to ask yourself these questions, to be able to dive into your business, ask your, your staff, get all the inputs you possibly can on ways in which you can grow and what you could do and how you could do it. Talk to advisors, talk to people about capital, right? Gather the information and see what's possible. But the reality is, is that there's always choices, right? Uh, and advisors like ex— like us at Exio and an exit engine can give you options that you didn't know you had. There's all kinds of things, but you do have to take that mindset, right? Don't stay stuck at the crossroads, right? As John said, when you come to the fork in the road, take it. The reality is that there's not going to be a bad path to go in when you have this choice. It's just going to be about your time, about your energy, about the capabilities of the people that you have around you and your ability to be able to weather a little bit more time before you're able to kind of check out, right? So I think, again, the idea behind all this stuff is that what really matters to us is that what we want to see you do is whichever way you go, right, make sure that again that you're doing it with your eyes wide open, right, that you have help along the way and that you're doing it for, you know, and that you're planning no matter— even the growth still needs to plan hopefully to an exit one day, right? And so you're not going to waste your time by preparing your business. You're not going to waste your time by getting systems in place. growth. You're not gonna waste your time by, by having the right, uh, you know, level of staff, uh, you know, to delegate to. Because these are the things that if you— whether you grow or not, are going to be valuable in the future. They're going to be valuable to you as you grow, or they're going to be valuable to the next owner. And that's going to make your value and salability better, you know, you know, when you actually do try to exit, right?

Yeah.

Anyway, thank you to The Clash, first of all, for, you know, for giving us, for inspiring this podcast. I really, really appreciate that. John, you know, I know it's a— we're getting to sign off here, but again, I think we have it. We are right now at a crossroads, right?

Yeah.

Should we continue today in this podcast, or should we go off and get some lunch?

I am going to get some lunch.

That's the season.

But I want to do a quick plug before we do that, because there are— there have been— and I don't need to pat myself on the back, but I'm going to— there have been some incredible podcasts we've had in the last 6 weeks. And I'm just gonna do a brief plug. Chris Squalaro, Sean Lee, Joe Ulwig, Eric Goodstad, Bradley Rausch, Ryan Provo and Norman Strobel, Maria Meadows, uh, Craig Keegan, Those are just some of the people. And those topics range from sales leaders to roll-up experts to leadership development people to people running an RTD cocktail to people running— to going through the scenarios that you very likely are going through of, should I stay or should I grow? Should I buy companies? Should I sell my company? And Eric Goodstadt is going through both right now. So go to podcast.myexitengine.com, listen to that podcast, and let us know what you think. info@myexitengine.com, joe@myexitengine.com, or johne@myexitengine.com. Let us know what you think.

Let us know what you think. We'd love to have the comments. And if you've got questions or things you're not sure what to do, let us know. We're happy to help. Again, our, our stated mission— John and I are here for you. Our mission is to help 1,000 different business owners successfully transition on their own terms by 2030. So However we can help you do that, we want to help you do that. Thank you, John. Another great discussion today. Let's go get some lunch. And everybody have a great day. We'll talk to you next. Go back and listen to those other podcasts. I can't tell you that if this is the first one you're listening to. Awesome, guys. Thank you so much, John. Again, another great talk today. Thank you so much, guys. Remember, should you stay or should you sell or should you grow? The answer is up to you, but ask yourself these questions and figure out that stuff. If you want some help, we're always here for you. info@myexitengine.com. John, have an awesome day.

Thanks, Joe.