18 Steps to Exiting Your Business (Part 3)

How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Deiss.

I'm going to run you through now the steps that we go through when we're looking at having a company get ready to exit. So when we're preparing a company to exit, we go through these 18 steps, really categories, and there's about 45 steps within them. Step 15 document your systems and your SOPS. Your systems and your SOPS. So do you have KPI dashboards? This is a form of documenting the system of keeping track of what's going on in your business. There are a lot of different KPI dashboards that exist out there. Some are free, some are not. Some come with expensive accounting programs, some are ridiculously expensive. But you want to have something where you're able to look at the KPIs, the key performance indicators, and your business on a daily basis and review them at least quarterly. At least quarterly. This goes to one of the other growth indicators, which is again, impacts your value and that's dynamic resource allocation, meaning that you're looking constantly at what's working best in your company and you're getting rid of the things that don't work to take the budget that was being devoted to that and the people that were being devoted to that and put them in more productive places to make more money. Right. So that's really important. Also, capital expenditure investment is something we want to track. And again, on the growth indicators, capital expenditures that are 70% higher than the median is important. So if most of the of your competition is investing a million dollars a year or $100,000 a year into the business of capital expenditures, you want to think about being at 1,700,000 or 170,000. You also want to maintain low debt. The less debt that is on the books of the company, the more appealing it is to a buyer. So a debt to equity ratio in the top 40% for your industry. And again, you can look up industry averages online. There's a lot of places to get that information that's going to have an impact. The ability to have positive cash flow will also have an impact on your business's valuation. And then you want to have your SOPs. So SOPs is standard operating procedures. Step 16, diversifying your customer base and the source of your customers. You don't want any single customer to be more than 15% of the revenue or profit of your business. You don't want any single customer to be 15 more than 15% of the revenue or profit for your business. You also want to diversify where your traffic is coming from. So use the traffic channel grid that we talked about in sales to run a traffic gap audit and find out where are the places that you're currently getting your traffic and where are the places that maybe are opportunities for you to get more. Step 17 is having clean audited financials. Audited statements, excuse me. Financial statements come in three varieties. Compiled means you basically take your box of stuff to the, to the accountant and say, hey, can you put this into something that looks like a financial statement? There's no responsibility, there's no review or anything like that. It's just literally a clerical task to take it and from the form of all the ways you have it right now and put it in a financial statement, that's the least valuable, least relied on and least expensive option. The middle ground is a reviewed financial where the accountants actually go through and do some work to look at what you're giving them and check it out a little bit. And then the one that we really would love for you to have and it's going to give you the greatest value bump is to have audited financial statements. Audited means that the accountants are going through and they are actually certifying with an opinion that other people can rely on and creates liability for them. They're certifying that the financial statements present fairly the financial position of the company as of the date that they say that, that they're certifying for. The other thing you want to have is a very careful budgeting process. So if you're not doing budgets now, you want to do budgets. So budget is going to be you're forward looking at least for the year, for the next. And I would do it quarter, quarter by quarter, month by month. And then you'll track your actual performance to what you thought it was going to be. And the big value of this is that the lower the variance between your projection and the actual performance of the company, the better chance you'll have of having a valuation based on your forward looking 12 months FTM as opposed to based on the last 12 months trailing 12 months TTM. If we can get that. Like if you're saying the last 12 months maybe you did a million dollars in profit, but you're projecting you're going to do 2 million in the next 12 months. Well, the ability to get a valuation on the two versus the one is literally double and if you're a multiple of eight, that could mean $8 million of extra money to you on an exit. So it's very, very important that you've got budget and actual tracking so that you can say, hey, we're projecting 2 million for next year. We had a million last year, but for the last three years our budget variance was only 5%. The actual to budget variance was only 5%. So we're pretty sure this is going to happen and you can sell the buyer on paying you on forward looking as opposed to trailing. And that's a huge, huge value deal. Last but not least, using Micro M and A for growth. So we have a whole program on that called the Epic system. It is the second most important thing to growing fast in the list of 10 that are in this wheel that we've been kind of talking about. So there, one of the big things that you can do there is you can have enterprise value or EV acquisition arbitrage. This is where you're acquiring other companies or assets at low multiples that are significantly lower than what your company's valued at and you instantly get the value bump. So if you bought something that had a million dollars in profit, that was that you bought at a three, you paid three million for it, but your company's valued at an eight, then you're going to get the difference. Eight minus three or five times the million in profit, $5 million of additional value instantly the minute that that comes into your company. Really cool strategy for building things. Just thinking about your acquisitions, whatever it is that you want, acquisitions can help you customers. If you want more customers, you're going to be increasing your market share. You just acquire your competitors. If you want more leads, then you're looking to acquire media that is already somebody reaching out and aggregating the attention and eyeballs of your ideal customer profile or your icp. That's really one of the fastest ways to get more leads is just go find a podcast or Facebook group or a blog or something that already has your ideal customer. If you're looking for more capacity to get team, equipment or resources, those are all acquirable. They even have a term for it called Aqua hiring. If you're looking to increase your average order value so that you have bigger transactions on the front end, then think about going and acquiring other people's products or services. If you're thinking about I'd like to have a higher level lifetime customer value, then think about going out and acquiring recurring revenue type companies and assets. If you're thinking, maybe my margin isn't as high as I would like it to be. I'd like to make more margin. Then go up and down your supply chain and acquire people who are making a profit before you get to making a profit. Like your manufacturer or the people that make the ingredients or components, or the people that are your content creation company or your agency. Right, Those are all places where somebody else is making margin before you do, or somebody that's making margin after you do. That's taking margin out of your pocket. Like you are selling through affiliates and your affiliates are paying, are getting a 30, 40, 50% commission. Maybe you just acquire that affiliate. Now you have that profit margin as well. And then if you need innovation, which is also important, you can get new products and services simply by acquiring the intellectual property. Okay, so these are all things that you want to think about acquiring. And again, this is super, super high level of what we do in Epic. So if you're interested in this, you might think about getting involved in the Epic challenge. For traffic. You can acquire groups, you can acquire social media sites, you can acquire pages or videos or other things that have already been ranked in the search engines, other people's lists, other people's products, other people's intellectual property or events. These are all things that when you own these, you have the traffic and you don't have to rent, you don't have to pay to advertise on these things. You actually at that point are a first party media owner. And so there's a lot of ideas for you. And then last but not least, if this is something that appeals to you, you should definitely think about taking the Epic challenge. All of these are the things that go into increasing the value of your business. Because I know we went through things fast, but again, this is just an overview of all this stuff. And then look at the tool that you'll also have where I break down exactly what you want to do and when to be able to do each of these steps. And that's, that's what we have today. So thank you so much, we will be back. We will see you next week.

Ever wondered how some people build real wealth through acquisitions while others just sit on the sidelines? Well, I'm here to tell you it's not about luck. It's about having the right system, the right deals and the right guidance. And that's exactly what we give you in the Epic deal Fast track. If you've been thinking about buying a business, but you keep getting stuck, whether it's Finding the right deal, structuring the financing, or negotiating with sellers. You are not alone. Too many people waste months, even years just thinking about acquiring a business while the real opportunities pass them by. The EPIC Deal fast track is not another course. It's actually an implementation program and it's designed to get you from the idea to the acquisition in just 16 weeks or less. We work with you one on one to help you find, fund and close your first or next deal. And once you do, we're going to plug you into our elite EPIC board community so that you can keep scaling through acquisitions. We install three powerful systems in your business. The first is the Deal flow engine so you always have high quality off market deals coming to you. Number two, we give you our offer and funding system so that you can structure offers that get accepted and fund them creatively many times with no money out of your own pocket. And number three, our closing and integration system so that you don't just buy a business, you actually successfully run and scale it once you have acquired it. Plus you'll have direct one on one support from an EPIC Deal Advisor every step of the way. And that's people that have actually come up through this system and done these deals themselves. That's the only way to become an EPIC Deal Advisor. And if you're serious about acquiring a business this year, don't just sit on the sidelines. Just text I'm in to 334-45-89034 and we'll get you in six. So text I'm in to 334-45-89-9034 will get you in. No fluff, no wasted time, just real deal making from people that are actually out there doing deals right now.

I'll see you there.