The Exit Engine Podcast Episode 49: How did we get here?

Welcome to the Exit Engine Podcast, episode 49.

Championship—

the Championship League is the one that—

okay, wow.

So they were in League One, they went 3 levels, they've, they've moved up one level for the last 3 years each year, which So if they win—

if they, if they win— no, they come in in the top 3 spots in this league, they'll go to the Premier League.

Correct.

Which is insanity.

And they've— considering where they were, and, and they started in, in like League One, which is 4 levels down. So basically they have moved— they have literally gotten promoted every single season in the last 4 seasons since they took this over. They've moved up 4 levels.

That's insane.

Who does— how does this happen, right? Right? And they've got a giant following and the biggest international following probably of like any soccer team outside of like Manchester United and, you know, Barcelona.

Well, they're like the— they're like the Savannah Bananas, but it's a real team.

But it's real, right? Exactly. They've kind of made this— they've got the show built around it, but the reality is that this is a real thing with real people. And this town has like been revitalized in the— you know, there's a long— it's the longest, oldest, like, uh, whatever, the oldest soccer stadium in the, in the country, you know, like it's the— yeah, yeah, I mean, Wales, but technically— but anyway, yeah, I mean, it's just an incredible story. And for people to go to have that kind of like success like that and to parlay shit into that, like, I mean, even people with money—

They're in the Championship. League One is the 3rd, League Two is the 4th. That's insane. I didn't realize that they were in the Championship this year. I thought they were— I thought they were in League One, which they just—

so this end of last season, which ended in the spring or whatever, they got got promoted into Champions League, so that will start in whatever, in September or whenever it starts, or October or whatever. So that, right?

So— Oh my goodness.

Yeah, right? Crazy.

Their stadium holds 13,000 people. Yeah, it's the second lowest in that league.

They're gonna have all kinds of issues with that. I mean, I don't know how— that's a whole other level of stuff, right? They're like, how do we get— how do we make the infrastructure and stuff?

Well, there was, there was Luton Town, which is the— they, they went down, but they were in the, the Premier League last year, and they had like a— it was literally a, I mean, a tiny stadium. It wasn't even 13,000. I think it was like 8,000, and they were hosting Manchester United like the 3rd week of the year.

I mean, guys, how does that happen? I mean, you, you just— because they— those fans travel, right?

I mean, it was a shit show because it's like right near London, so they had all— it's outside of London, so they had all these cars, and it was, it was a mess.

Right, right. I can't even imagine a place like Wrexham, a little village like that with all these, like, you know, I mean, they've already, but they've already had this stuff. I mean, this has been going on for years. I mean, the, the, the people that come in and the teams have been playing and the people and the cameras and the, you know, the media coverage. And, but boy, you know what they did? It's just like anything else. And look, and this is a good lesson for what we're talking about today because the, the, the, the, the stick-to-it nature of this. Like, so here's the thing. It's one thing to say, it's one thing to have a concept. It's a whole other thing, right, as a founder of anything, someone who's taking over a business, whatever that is, right, is to be able to grow it. And what these guys have done, which I just find so amazing, is that they hired the right people. Obviously, they went into this very, very smartly, right, by not just buying a team and whatever, but they went in, they got consultants, they got people from professional soccer in, you know, football in the UK. who were really, you know, for real experts, right? And people who had been— had done this before and knew how to do this. And so, you know, they hired— you know, they hire a— they, they have a whole new, you know, basically ownership thing. They have— they hire a CEO, you know, team president to run the thing. They hire a general manager who's got to do all the decisions and the player personnel and all that stuff. They hire a new coach. And so right now, right— so right from the beginning, it's right out of the gate, it is a new day, right? Right? And showing what they're doing and the way that, of course, that they've lived this out loud and built this out loud is what's so crazy about it because that's what we see so many people in, in doing right now in the world, right? Is—

Well, yeah, it's, it's like, you know, and everyone's familiar with the Moneyball story, but at the time, like, Moneyball was using the tools that they could, that they needed to do, right? It's, it's not as if Wrexham could compete with Manchester United and buy the same players. Just not, not realistic. In the same way, Oakland, the A's, couldn't compete with the Yankees, right? They were, they were getting there. They were losing players to the Yankees. It's like the, the guys, you know, Rob and, uh, and the other guy there, I forget his name, but like they, they, they look at an opportunity. They hired all those people that you mentioned and they said, how can we compete? What is a way that for us to compete and us to go up so that we keep going up in the league? And keep getting, and their ultimate goal, I assume, is to win the Premier League, which is, which would be absolutely insanity if they if they go to the Premier League. And if you're not, you know, people aren't familiar with soccer. Go check it out. It's awesome. It's on Saturday mornings.

Get a piece of it. It's some of the best. It's some of the best sport sporting sport in the world. Forget about whatever, no matter what it is. Right?

Go Spurs. Tottenham is my team.

Exactly.

Got him forever. Anyways, that's another whole argument. But it is. But, but the—

but, but, but again, it— this demonstrates, right, which is, which is so critical kind of to what we talk about all the time, is the ability to be able to— you're coming in, you're making these changes, you're showing it's about accelerating growth, right? They didn't have 5 years to wait to promote, right? Right.

And they didn't have unlimited resources, right? Yeah, yes, they're both movie stars or TV stars and they have money, but But they went at this very smartly and said, we need to grow our following, we need to get the team better. And they've done all those things. Like, I can imagine that the internal scorecard, and maybe they're very self-critical people, right? I hope that they are because they probably are because they've done this.

Yes.

But I can imagine that they're exceeding all of their metrics in the things that we think about, social media views, revenue, obviously, profit, all those things that we look at and the levers that they're pulling were really smartly done and really well done when they went in there. And they, they clearly made mistakes. All their players didn't hit. You can go and Google this, the, the, you Google wrecks and busts and it comes up. But man, they, they did— they made intelligent decisions. And they wouldn't— they didn't stick with them either. They made their decisions and they, they, they said, we're gonna stick with them, but to a certain point. But if when they realized they made mistakes They quickly change them too.

That's it. That's it. Then they're able to adapt and they're able to, to pivot and they're able to change and do— but, but again, it, it, it's all about people, right? And at the end of the day, what they did was they smartly, before they got into this and before they spent, probably before they spent, you know, any kind of real money, um, you know, had, had the people in place to be able to help them figure out what it was they wanted to do. And I'm sure that there was everything from, if they were, you know, They don't show all this obviously going on the documentary they were doing as a part of this, which by the way is also a revenue stream, right? So, you know, when you're this famous and you can do this stuff and you can put on a show about anything, um, it obviously helps. But it would not have been as good as the programming itself wouldn't even be watchable if it weren't for the fact that these team— this team kept doing what they were hoping it would do, which was to progress and, and promote and go through a whole season. And of course, the human element and the stories of the people and the 107-year-old guy who's been there and was, you know, when the team was first started or whatever it was, and he's still there in his little corner or whatever, you know, there's the human element of all this. But the bottom line is the, uh, it's high about hiring the right people, okay? And being—

Well, we always say it's people, it's process, and it's product, right? So if you think of the Rexum, like, every company has those 3 things, and, and When I say product, I mean it's product or service, right? But you have to have really good people. You have to have a really good product. And if sort of unique companies have all 3 great, have really great process. And if you don't have one of them, it really hamstrings you when you're trying to build a great company. So when people come in, it's like, turn those levers, people, process, and product. And a lot of things take care of itself after that.

That's exactly right. And again, staying on top of that stuff and making sure that you understand the marketplace and watch how the marketplace changes and all that stuff, that growth, all that stuff has to do with that. You know, obviously, in a situation like a soccer team, you've got, you know, multiple revenue streams, right? It's not just about ticket sales and stuff. It's TV contracts and the merchandise and, you know, and whatever else goes on there. Plus, of course, they've got a, you know, giant documentary that they're on Netflix. But the realities are on Hulu, whatever. But the bottom line is that, again, it's about understanding all of the business model, understanding the people that you need to have in place, and being able to— but setting goals. And so what we wanted to talk about today, Jon, was let's get a little bit more in depth. We've never done this before, and we've kind of purposely not done it. Yeah. But I think that it's worth the time too. It's a summer afternoon. It's a little bit rainy here. Where I am. I'm not sure what the weather's like there, but not a great day today. So let's take some time, and I want to dive in a little bit more into what specifically what ExitEngine actually is, what people can expect when they're a part of ExitEngine, how they can do that, and, you know, basically all that stuff. And I thought it would be, you know, smart to kind of talk about it in the conversation and kind of in the way that it was born. And so what we'll do today, and this, you know, in this, on this version of the podcast, is just talk a little bit about where John and I come from, why it is that we chose to do this, what it is that we think we're doing. What do you think you're doing? But be— and talk a little bit about what the value is and what we see. What is the kind of big picture here and why are we doing this and what do we think is the thing? So let's start off. By talking about what our kind of mission, our stated mission is. And we've talked about it, maybe brought it up a couple of times, but I think it's again really important. And by the way, the way that we're doing this is something that we would recommend in terms of the way that people examine their own businesses. And so what we're hoping to do is to show you that we also drink our own Kool-Aid and that this isn't just about us telling you to do something or whatever, and then we're off, whatever. No, it's, we follow these same rules. We are also growing a business just like you are. Right? Right.

And we don't have all the answers, right? We have a, we think we've learned a lot throughout our careers, but just the journey that we've been going on with ExitEngine and Exio Advisors, we've pivoted, we've changed, we've altered, and we're going to get into that during this conversation. But just realize that You know, we haven't made all the right moves from the beginning, far from it. And, and, but, but what we have done is we've listened to people and we've solicited opinions from people and we've talked to our customers and our potential customers and tried to deliver what they've told us that they need. And when we've talked to them about things that we, we think we're going to do, they're like, they would give us honest feedback. And they'd say, yeah, do that, do that, or stay away from that, stay away from that. So again, we don't have all the answers, but we've tried to ask the right questions and talk to the right people in order to get a better answer.

That's really well said. I think that's it. And this is really good advice for anybody in business at any point, right? Which is that, and especially at the beginning, because I think that, again, we all have ideas and entrepreneurs by nature, okay, are idea people.

Right?

They are— I can see these 4 or 5 different kind of what might to ordinary people look like kind of disparate things, and I can see how they link together, or I can, I can see a hole in a marketplace. I've had experience like we did in a specific thing where we, where we realized some of the problems and things and felt like we had solutions for them. We'll talk about that in a minute. But I think that the, the, the overall, you know, learning here is that entrepreneurs Founders in general are the kinds of people that are— they are problem solvers, they are visionary, they are, right? And that's their nature. The danger, okay, that entrepreneurs will find themselves in, and I'm sure that there will be people— first of all, we want to have your feedback even on this episode of this podcast. So please remember, if you are listening to this wherever you're listening to this, please like and subscribe and share this with a business owner you love. Uh, they will thank you for it later. But that said, the idea here is, as an entrepreneur, you need to have the— the— you need to be kind of constantly asking your potential audience, partners, whatever, what you're doing for feedback so that the market will tell you, basically tell you what to do. All right, and it's a very— it's a maybe slightly oversimplified, but it's, it's to prove a point. When we started Exit— when we started Exio and Exit Engine, we had, you know, some very lofty ideas, okay? We had some very big things about a big course and about how we could teach people to do this because we saw a hole, right? Um, and John and I will talk about our backgrounds and how we met and all that stuff in a minute. But the idea here is that I'm trying to get at is, as an entrepreneur, the, the overarching— your, your biggest job is to listen And move your situation, your business, your product, whatever, right, in the direction in which it is being— it is resonating.

Yeah. And listening takes the form of obviously active listening and listening to people when they're telling you something or reading something, they're telling you something, you know, that they've given you feedback or given you review. Again, look at feedback as a gift to the extent that you can do that. You know, even if it's hard to take sometimes, it's a gift and take it as such. If you take it as such, it changes your perspective on it.

Absolutely. And look, the reality is—

Yeah, but listening also takes the form of people not re-signing or not signing up again for your product or leaving your product.

Right.

That's a part of listening too. Obviously, they're not telling you something, but they voted with their feet. They've left. They're not returning emails. They've blocked you on social media. Gosh, that Hopefully it doesn't happen. But that's, that's listening too, is saying, wait a second, what did we not do in this case? And you won't get perfect information, you won't get perfect review, you won't get reviews from people who left. It's just you have to assume that their review, if they wrote it, would be a 0-star. And if you take it, if you take every customer that leaves you as a 0-star for your particular business, again, it helps reshape— oh, we have, we have 4.7 as our reviews. No, you don't. You just, you just aren't reviewing. You just aren't getting reviews from the people who've left you.

That's exactly right. You're not including, you're not capturing everybody in the thing, which is again, that, that's okay for— there are other reasons why that's okay too. But the, but the— you're right. The idea is that what you need to be is to be open to the feedback. And again, not everybody's right. Okay. And a lot of the feedback is, you know, hey man, shut up. You don't know what you're talking about. Okay. That's fine. You're right. You're allowed to, to have that reaction too.

Right.

We all have. And the reality is that sometimes we're like, look, it's one— but what we're balancing here is our vision, okay, for what we think it will be. And by the way, we also know, right, that humans are notoriously bad at predicting the future. Okay, so these powerful brains we got, and the thing that's the worst at is actually being able to predict how we will feel later on. So the point is that it's very difficult to predict that. What you need to be able to do as an entrepreneur and a founder is to keep yourself open to the way that things Kind of move slightly, right? Not always huge pivots, right? We're not talking about a giant turnaround where I was starting to build this, you know, a car and now I'm building an elephant, whatever, right? That's not— we're talking about the small ones, the 30-degree turns, right? Where you are basically saying, hey, look, um, I listened to the audience and what I realized— and let's just use a real example here.

Yeah.

When we started this company, what we thought we were going to be doing, we were going to be doing exit planning stuff all day long. And what was going to happen was that we were going to get all these clients who were going to come in because we have this process and we know how to do this. And, and we're going to get out there on social media and people are going to see what we're doing, whatever. And they're all going to, you know, and they're all going to just, you know, they're going to want to get on board with this thing because what we're saying, it makes so much sense. Well, that was not the case, was it, John?

No.

The reality was, right, we started this thing, we got this stuff out here, we started getting the word out, whatever. And people are like, what? You do, what do you do?

What's the thing?

What's exit planning? Like the, the, the, what we didn't, we had spent so much time inside, uh, this industry that we had no idea how many, how few people really realized what this industry was and how it worked. Right. And so when you start talking to, you know, founders of, of companies where they're generating, you know, $2 or $3 or $4 or $5 million, you know, as opposed to $30 or $40 million. You start to see a big difference in terms of what they understand and what they just know and what they— and then also what they don't know. And so the thing for us was that what we had to figure out was, okay, we start talking about this stuff and nobody knows what we're talking about. And so we had to contextualize this, right? We had to figure out a way in our outbound communication, in whatever we did, to figure out, okay, how can we educate people on what this is? And what are the, what is the pain that they may not even know that they're experiencing? Because the problem with a thing like this, John, is until I'm actually in it and experiencing the pain of having it not go well, right? Until I get to that, that's really the point at which I go, man, I wish I had somebody there helping me do this who could have told me this ahead of time.

And as we've said a couple times, and this came from learnings, is right, is Most people don't even think of exit planning or think that it's sort of critical or they need it. But really, when I think during a conversation we had one point, it was like, really, I may have said it, you may have said it, is exit planning really is good, just good business planning, right? If you're planning your business and you're doing that with a regular cadence and reviewing your business and able to pull your financials and able to look sort of longer term at your business, and sort of detach from it, you're already doing exit planning and you don't even know it, right? There's things that you can refine around the edges. And from our experience in doing that, working as brokers, as Jo referenced, that's where we met, is we realized that not a lot of companies are doing that. Not a lot of companies are doing basic business planning, so therefore they're definitely not doing exit planning.

Yeah, absolutely right. And I think, again, it's a matter of, What we also discovered was, as you get deeper down into it, because then the next question becomes, OK, well, how do you reach these people? And how do you kind of deliver this message in order to get them to understand what they don't know? Right? And, and what we know, and I, again, as a marketing-oriented person for, you know, all of my career, 32 years or so, it was, OK, what's, what's our messaging? Who's our audience? And what's our messaging? And how are we getting it out there? And we knew You know, again, we knew from being in the business for a little while that it was the pain that was always going to be kind of move people. Um, but trying to get people to feel that pain so far in advance, right, it really becomes the challenge.

Right. When they have, when they have 19 other things they're doing, they've got suppliers upset at them, they're trying to raise money.

Other fires that they're, that they're working on right now. Like, that's the problem, right? You are, as a founder, you are, you are not like sitting around without things to do. Right? So not one of the problems, you know. So the, the, your focus and what you're doing and the firefighting you're putting out and the decisions you're making, and, and maybe like most founders, especially early on, you're very wrapped up in the day-to-day operations of things and all that stuff. And so, so it is difficult to be able to focus on anything other than what's right in front of you, right?

Yeah.

Now, there is long, you know, once a year, you know, if you're lucky, people will sit down and have a, and have a get-together with their staff or whatever it is, however big or small, whatever, and say, okay, let's look at the year ahead and what are we going to do and what are— set some goals and try to do some of that stuff. And I think most people at least probably attempt to do that. Um, how successful they are and actually, uh, you know, we've seen, I— we've seen the insides of, of so many companies, John, and we've seen very large successful companies who can't manage their way out of a paper bag, right? I mean, the reality is the bigger the company, the more it succeeds despite itself. You have a certain amount of momentum. You will be carried by a lot of stuff, and you can have a lot of internal problems and still be relatively successful.

Oh, yeah. And kind of the way they define success, right? There's business— like, we've encountered, obviously, profit-making entities. We've encountered lifestyle businesses. And like some— and there's a lot of companies that are in between, right? It's a— it's not profit maximizing, meaning like there's not a desire or a push every year to make more money, make more money. And then there's the other side of the coin of these lifestyle businesses that provide a wonderful living for a group of people and a family, as an example, or an owner, and they work not 40 hours a week and it provides a good lifestyle for them, and that's fine. Completely fine. When we go to sell the company, we don't want to sort of market it that way because a lifestyle business is often not what someone wants to buy. Sometimes there is, but really it's sort of reshaping the company so that in the event that they were to change things and they were to be profit maximizing, here's how it would look, just as an example.

Yeah. And look, those are two kind of like things, but within those, right, are like nuances of all that same thing. But The idea is that, that, that again, exit planning is the kind of thing by its nature that is about some state of the future. Okay. So, John, you talk about it being like insurance a little bit. Okay. It's like, well, insurance is one of those things. It's like, well, most of the time people have insurance when they're required to.

Yes.

Okay. Meaning something else, some other thing you're doing requires you to have insurance in place.

Your mortgage, your mortgage provider. If you don't have a mortgage, You really don't have to have insurance. I mean, most cases, you don't have to have insurance. But if you have a mortgage on your house, your mortgage provider, your lender, is going to require you to have certain types of insurance.

And you won't be able to have a mortgage unless you do, right? And so, the idea is that— so, now, guess what? Now, I'm protected. So, now, the rain comes and the flood in Texas, God forbid, and obviously thinking about all those people out there, the ability to be able— some terrible thing happens to your house, right? And now, gosh, But now you have insurance in place, and now I don't have to pay for the new roof I got to put on the place or whatever the whole thing is because I had the insurance and it wasn't that great. And gosh, I'm so glad I had the insurance. But the only reason you had the insurance to begin with was because something else required you to have insurance, because insurance by its general nature is looked at as an expense, not an investment. And so therefore, it's about, you know, now again, different people have different views on this. There's not— this is not a one-size-fits-all thing by any means. There are people out there who just want to have the insurance, man. You know, and that's smart, right? But it is about cash flow. It is about other things you have to spend. It's all got to be balanced against everything else you have to do in that moment. And so, exit planning becomes a thing where it's like, in business school, they will tell you that exit plan— exit should be a section in your business plan. Okay.

To whom are you going to sell your business? What is the goal, right? Again, one of the things we counsel entrepreneurs to do And the thing that they always skip over before we get involved is— not always skip over, but many times— it's what are your goals, right? What do you— so that you have this business, you own it or you bought it, and you have presumably a projection that you're going to grow your revenue and grow your profits over the course of a couple years. But like, to what end, right? What are you— what is your ultimate goal with this business? Is it to fund your retirement? Is it to live out your retirement? Is it a Second career. Well, there's a start to things when you buy the business. If you don't think about the ending, how are you going to know when you get there?

That's it, right? How do I know I'm arrived?

No one gets in their car— if you have to go, if you have to drive to Nashville, Tennessee, right? And you know you have to drive to Nashville, Tennessee, you don't get in your car and head to New Hampshire if you're from New Jersey, right? You, you go in the general direction of Nashville, Tennessee. In the same way, like, and you realize that there's gonna be road closures. And to take the metaphor further, You're not gonna— you might not go the exact way that it has on Waze or Google Maps, but you're gonna generally head in that direction. So we counsel the— we talk about these people that are clients is you have to have a set of goals because you're not just gonna randomly get in your car and you're not gonna randomly run your business because you will make decisions and you will need to make decisions and put things in place in the event that you want to sell your business in 7 years. Okay, I want to be retired by 2032. Therefore, I need to start thinking about selling my business in 2029, 2028. To whom am I going to sell my business? What are my revenues going to be like at that time? What do I need to get from my business? So those are the types of goals that we're talking about with our clients. And to say, set these goals, realize that you can change them, but have something on paper that you can change, not that you're just making up.

And what follows in that, right, is the idea, if I've got goals and now what I've got is I should have options. Right? Because I don't know, I can't predict the future exactly, right? I don't know what's gonna happen. One of the things that we talk about all the time, right, is the 5 Ds, right? And, and we've had a lot of guests on recently. We probably haven't brought this up in a while, so worth recapping right now. The 5 Ds, as we call them, are the 5 ways that most people exit their business.

Right.

Okay. They are death, divorce, disability, disagreement and dissolution, right? So those 5 Ds are the way that 80% of people will leave their business. Yeah.

Okay?

And that's a lot. That's a, that's a very high number of people. Now, within that group, okay, it is, there is every kind of stripe and thing that you can possibly think of. It's a very broad category. But what we can say, right, with, in no uncertain terms, is that The ability to be able— you cannot predict when you will die, okay? You may not even be able to predict that you'll get a divorce, right? You're definitely not going to predict a disagreement, right? And the dissolution thing is something that you can avoid potentially if you can, right? But—

Really is awful too, and you can't predict that either.

That's it. So the idea is, okay, well, what are the things I— the first thing is, what are the things I need to do to save, to protect the business In the event one of those things occurs, right? Because that's the— that is, those are the odds, right? So just by playing the odds, the first thing is, is just like you're buying insurance on your house, whatever, on the— in the event that a meteor hits it or whatever it is, extreme thing it is. The idea here is the same thing, which is that to say, look, what you're doing, the first thing you're doing is hedging, right? You need to hedge against these adverse exits. Protect yourself. How do I protect myself against an adverse exit? I can't predict when I'm going to die. No, but what you can do is say, in the event I do die, God forbid, then this is the way that the business gets handled, who it goes to, who's in charge, how it goes, what we do with it, how I get to feed my family, uh, who's left behind, you know, whatever, how I sell it, who I sell it to, whatever.

Yeah, and this is one of those examples of publicly traded companies. Sometimes they don't do it very well, but sometimes they do do it very well, right? This is one thing we can learn from larger companies that's directly applicable. Now, you're not going to have a succession plan, right, that these publicly traded companies have. Oh, if, you know, if Joe passes away or whatever, then Sarah is going to take over. But you can have a plan, like, just like Joe said, and you should have a plan to say, In the event of these things happening, my incapacitation, the business will— this is what will happen to the business.

It's so important because again, it's not about you, right? It's about your— it's about your family, it's about your employees, it's about all— it's all— it's about the people who live behind. Anything— life insurance in general, right, isn't about you, right? Life insurance is about you preparing for other people for when your income goes away because you no longer exist, right?

And that's, that's why we think of it as insurance. That's why I thought of it as insurance at one point. Like, probably in the last couple of months is like, really, what, what, what exit planning is doing and what we're doing in business growth planning is we're— it's an insurance policy. It's you're buying something to, to prepare for something you can't predict, right? A death, a disability, a divorce, dissolution, all those, the 5 Ds. And, and what it does is you're investing in your business just like you're buying a new, a new machine You're buying a new CRM system. You're investing in a director of HR, as an example, which a lot of companies don't do. They do too late. They do after a problem instead of before a problem. And this is the same deal. You don't want to, you don't want to hire a director of HR to have to clean up a mess that already exists, just like you don't want to have to buy insurance after the flood hits your plant.

That's exactly because the reality is that there is no value in that insurance policy at At that point, right? There is still the, the insurance policy is about a future state. And so what exit planning is doing is basically future-proofing your business.

Well said.

Okay? So what we're saying is that when you sit down and you say, first of all, let me knock out the 5 Ds. How do I do this? How do I stave this off? What do I do in the event that these things happen, God forbid? And then the next thing you're gonna say is, okay, how do I optimize in the best possible scenario? How do I optimize my exit? How do I— what am I gonna— what do I need to do to this business to make sure that I can transfer it to somebody at the highest value at the best time, no matter who that buyer potentially is? Because there are ways to get lucky. I got lucky when I sold my business, frankly, when I sold the digital marketing company, because it was— we happened to have a thing at a time when that people wanted. And despite some of the other issues we had with the business, like our customer concentration and things like that that were terrible on paper, we were able to sell it for a decent amount of money. That was because we got lucky, right? What we can do though, and what we've learned from situations like that, is how to prepare yourself for that eventuality, right? And be able to do the things to the business that prepare it in the way, in the right direction, in the right way. So we talk about setting an exit trajectory. The trajectory is to say— and that trajectory we can set at any point, and it can change and it can morph and whatever over time, but it's got to start somewhere. It's putting something— it's putting a stake in the ground.

Yes.

Here's where I am right now. This is my value and my salability as I speak right now. Right. The next thing is to say, here's where I want to be. And I want to be this in what time period? In 9 months? All right. Harder, right? 3 years? Yeah, that might, right? That's doable. And since there are 3 pieces of my business that I can, from a value standpoint, that really, that are the only things that I can, that have any kind of control over whatsoever, right? The top line revenue, the amount of money I'm generating. The ability to— the cost of doing business, what my costs and my efficiencies are on the back end, my profitability. And then there's the third thing, which is the multiple. And the multiple is less controllable because the multiple is a combination of the other 2 buckets, and then also some other outside factors like comps and other businesses that sold recently in a similar thing or whatever, or in the industries. There's lots of other factors.

It's subjective and changes all the time. So yeah.

And what you're looking to do is to raise that multiple because you are a premium business, right? In other words, you are a desirable business. Okay. And so your multiple, the best chance of raising your multiple comes because the other 2 buckets are so well, right? So well organized.

Right. You've met, in other words, one way to look at it is imagine being able to grow your revenue by 40% while reducing your costs by 60%. Now, that is rare in business. It certainly happens with some types of businesses and it happens. But man, when you can do that, that is a premium. You know, all other things being equal, that's a premium company that's able to do that. Because how did you do it? How were you able to onboard, retain, grow that revenue 40% and Reduce your expenses by 60%, that's sort of an amazing transformation.

Amazing transformation. And again, most people won't be able to do that, as you point out. But what they will be able to do, and again, even more importantly than how I did this in the past, is showing a potential buyer what they can do with the business and how they can change it. And how if I had more time, I'd do this, but you guys, and here's the We talk about this all the time. Here's the plan I had for growing the— a new market over here. I'm not going to get to it, right? I'm done.

Or, right, or I don't have the money, right? Like, I, I, I, my bank has not— it will not allow me to do this. I think it's a tremendous opportunity. We have a, we have a different, you know, I've gone to different people. If you have money, then expanding into South America Just as an example, is a great opportunity because of X, Y, and Z. And you've put this plan together, you've thought about it. And Joe, you know, Joe came up with the marketable inefficiencies, right? What is it about your company and what's an opportunity that you haven't taken yet, yet you've planned out that you can provide to the buyer of your company to say, here's what I would do. And maybe they won't do it, but at least if you've thought about it. Oh, I have 4 projects that I'm doing right now. 3 of them are in progress. One, I haven't even started yet, but here's what my thinking on it.

And the best part to me, I think, as a business owner of this process is that you start to create options that you don't even know exist when you start this process. And what would we mean? Well, as you start to make your business healthier and more sustainable because you're doing the things that we advise and that all good exit planners advise you to do in terms of looking at your business, and understanding, you know, where you're spending money and how you're looking at stuff and how to look at your customers in all kinds of ways. And we can get into very, very detailed ways of the way that we can break a business apart to examine it. But the most important thing to take away from it is that you are, when you are, when you, when you start this process, you, you are starting from point A and point A Says we need to examine X, Y, and Z, right? When what I come— what comes out of that examination is a, is an understanding of my business that could be a way to change it, could be a way to expand it, could be a way to, right, that you didn't even know that was happening, whatever, where you suddenly are increasing your revenue or increasing your profitability because you made a change to how you manage something. Right. But if you don't start by looking and examining at the business through this lens, right, then you're never going to get anywhere. You may have built yourself a job. Okay. And we talk about this all the time, right?

Yeah, it's very true.

I've built myself a job that might be a very lucrative job, by the way. And there are plenty of people that we come across, right, who are paying themselves $300,000 or $400,000 a year.

Yeah, and, and, and they, they— it looks like a real company. Like, I mean, and it is a real company. I don't want to, I don't want to disparage people, but, but it's, but it's a company for them. It's like that. It's, it's that falls into that lifestyle category of this works for this person. But like, if you're trying to sell that to somebody else, unless you find a very unique situation where someone wants to come in and have that same type of lifestyle, and again, that lessens the options of buyers, right? To Joe's point earlier is You want to have your company be as— have as many options for buyers as possible. A strategic buyer, someone who has— who is an entrepreneur who sold the business. What's going to be appealing is the ability for that buyer to take the company in whatever direction she wants to take it, right? Whether it be a lifestyle business that she wants to take on, a marina down the Jersey Shore, an example. Do they want to expand it? Do they want to grow it? Do they just want to have a place for their boat and their friends to come? That's fine too. But you want to give that buyer the options to do 1, 2, or 3 of those situations that we just went over.

And also, as you go along the way, you have more options, right? You discover more things you didn't know. You run into capital you didn't know you could get, right?

Yeah.

That you potentially run into strategic partners that you never knew you could have, right? So the idea behind this, and again, we can't put too fine a point on this, exit planning is just good business planning, but it is business planning in a lens and the whole thing that requires you to set a goal and to march to that goal that is outside and apart from your just regular business goals, right? Because sometimes they are different. Right? You need to— what you need to do on the ground when you're managing your sales team, for example, okay, is— might be— should be in service, right, of that longer-term trajectory, but is going to have its own set of kind of sub-goals and objectives and things like that to hit, right? You as the owner, you're gonna be aware of those things. You're gonna charge those people to do that stuff. But one of the most important things you need to do is to be able to actually step back and Keep your eyes on the prize, right? Your job becomes, I need to get to this revenue level. Here are the different ways that I can do this, right? And getting the help that you need to be able to understand this and examine your business becomes— this is where it becomes critical.

Well, yeah. And the good point about— or just put a fine point on that, like revenue discussion, right? So, and this is why you need to be working on your business, not in it, right? If you're an entrepreneur, And you're making 40% of the sales. You're on these closing deals and you're closing deals for the company. Well, oftentimes to close a deal, an owner will come in and take a lower price and will go outside the parameters where the deal becomes profitable. And that becomes a problem, right? Because yes, you've won the deal and you've got the new client, but it's not as profitable. So When you're working on the business, you can set the parameters for your salespeople and tell your salesperson, no, we will not accept $100,000 because we're not going to make enough money on it. You will— we need to sell this for $125,000 and there's no going lower. And then what that does is, again, when you're working on the business, you can have those discussions. When you're the one selling, you're much more likely to say, I want to get the sale. You get that You get that endorphin rush and those dopamines go into your brain from getting a sale to say, I got it. Well, is that a profitable sale? So that's just one example of why you need to be working sort of levitating above the business and directing it as opposed to being in it. You have to think of your business as the product, not whatever product your business sells.

Right. That's, that's an excellent, that's an excellent point. And that's the way that we teach to do this, right, is that you as a founder Start to learn how to take this thing and look at the entire thing, okay, as, as an entity that you are trying to move eventually, right? Moving into transition out of, you know, give to somebody else, whatever, right? That becomes the product. All the, all the, all your products and services and stuff with inside that larger thing are the levers that get pulled this way and that way to make sure that you are creating the best, highest possible value and salability, right? And so at Exit Engine, as a member of Exit Engine or with working with Exio, what's the difference? The difference is that Exio is basically doing it for you. Exit Engine is kind of a do-it-yourself situation. You're able to basically get the guidance and the expert resources you need to build a business that's actually worth buying, and you can do it without burning out, right? Because you're in a situation where you're thinking about it early enough that you can plan this early enough to be able to do this. Building a business is hard enough, guys, right? We all know this, but planning your exit shouldn't feel like another lonely, confusing project you have to figure out on your own. And that's why we created Exit Anchor, right? This is the— this is a place where you're going to find guidance. You're going to find advisory partners who can help you move the needle. It's going to be all the resources and content you need to learn what it is you don't know. We're going to give you what you need the tools you need to be able to examine your own business. We're not giving you the answers, we're giving you the questions, right? And the questions are what are going in the— and that's going to drive the clarity you need to know what your business is worth, exactly where to focus to improve it, the confidence to exit on your own terms, whether that's next year or a decade from now. Okay, you don't have to do this by yourself, right? Join us at Exit Engine. Okay? Visit myexitengine.com. It's myexitengine.com today. Get started. There's a video there. You set up a phone call. We'll talk real quick. We'll decide if Exit Engine or Exio is right for you. That's up to you. But the idea is that we have the tools. We have the ecosystem. We have everything that you need to be able to learn how to do this. The podcast is just one level. bit, right? We try to give you guys as much information as we possibly can. It's obviously your— but your business is unique, right?

And so, and the unique community that we're setting up, um, and we're building at My Exit Engine, again, has entrepreneurs and the people who advise them, full stop, right? That, yes, we are part of that group, but there's also specialists. There's fractional CFOs, there's fractional CMOs, there's people who have done all projects of all natures to help entrepreneurs improve their business and help businesses just improve. Not even in the service— a lot of, a lot of the experience that these people have are not in service of planning an exit. It's just business improvement. But again, as we mentioned, when you're improving your business, you're tacitly doing some exit planning. So when you look through the lens of exit planning, it's, it's all about improving your business and making it more That's bingo.

Exactly right. Which is not— this is not just software. This is not, right? This is not SaaS. This is not the, you know, a piece of software you download. This is an entire ecosystem designed to help founders engineer a successful exit on their own terms. That's what we do. That's what this— that's what ExitEngine is all about. It starts here with this podcast. We've got a short one today, but John, I want to thank you so much for being here and for talking about this through this. We're gonna be back here next week with a whole new episode with a bunch of new guests and things like that. By the way, everybody, some big news coming up too. 2 big things that you got to know about. The first is, we are starting a second— there'll be another version of this podcast coming out a week in the next— within the next month or so. So, keep a lookout for that. So, we're gonna be actually— there'll be 2 episodes of Exit Engine Podcast per week moving forward. That session should start in August. So that's really exciting. And the other thing, John, is to know that we are also starting a webinar series. And this webinar series is going to take our advisory partners, many of whom you have met or encountered on this podcast, and is going to start giving you some very specific learning about specific things to do based on your specific needs. That will basically help you in all these different business areas as it helps you set and project your exit plan. Yeah.

And making those, you know, the podcasts that we've had, that we have, are broad-based, right? They're talking about a general topic. The webinar, as Joe mentioned, dives deeply into one specific topic and demonstrates our advisory partners' expertise in that area. And it goes into, as just as an example, people management and hiring and those types of things, or, you know, how to fix your books, hiring a digital agency, those types of sort of discrete projects that we believe and we've gotten feedback that people want. They want to go deep into one subject and learn about that subject all through the lens of exit planning.

Absolutely. Well said. Excellent, guys. John, thank you again for today. Guys, this is the Exit Engine Podcast you've been listening to. Please remember to like, share, subscribe wherever you're finding this. Uh, would love to, uh, get to have you, uh, share it with a business owner that you love and care for because they'll thank you later. Um, John, thanks a lot again today. Exit Engine, guys, you can find us. Shout out, we want to hear from you directly. Uh, email me at Joe, J-O MyExitEngine.com, or John directly, joh@myexitengine.com. Ask us anything, anytime. We're here. You can find us on LinkedIn. We're all over the place on LinkedIn, so find us there. Ask us a question. Come see us. Talk to us. Send a comment. You got a question, you can put it right there wherever you're listening, right under the podcast, wherever you're listening to it right now, whether it's on Apple or Spotify or anywhere. Um, thanks again, John. Have an awesome day, and we'll talk to you guys next time.

Thank you.