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Build a Business Worth Buying brings you candid conversations with industry leaders, M&A experts, and successful founders. Learn advanced strategies to scale, optimize, and prepare your business for an acquisition—because building a business worth buying starts with smart decisions today.
Jo Stapleton (00:00)
You have no idea the options that can happen when you are not sucked into the day-to-day operations of putting bait on a hook and dropping a line down. You need to be the guy up here who says, okay, drop your lines, go fishing, everybody. I've made sure the fish are here. Right? That's the role you want to have.
Aaron Alpeter (00:55)
Today we're joined by Jo Stapleton. He's someone I've looked to looked up to for a long time. He's the founder of the Exeo ecosystem, where he helps founders build businesses that create more value, more options, and more freedom, even if they sell or or they want to hold it forever. I first met Jo when he was the co-host of Exit Engine Podcast. and now he's got a new podcast, Exeo Founders Table Podcast. So encourage you guys to find that one wherever you
Listening your podcast. Jo spends this time at part of market that pretty much every founder has has to eventually confront. But most founders take too long to take seriously. The gap between building a good business and building one that somebody else can confidently buy. Through Exeo, Jo works around exit planning, value creation, owner readiness. And through his podcast, he's built a series of conversations and he's just gotten very good at pattern recognition of what it takes to actually build something that somebody else wants to buy.
The reason I want have Jo on is that most founders think about their exit too late in their life cycle. They assume it's something they prepare once the revenue is strong, once EBITD is clean, or once they have a banker on retainer. But Jo does a lot where he helps people think about
what actually determines value and how do we get the financialists where they need to be even years ahead of that exit idea. And so this conversation today is going to be about those patterns, what Jo has seen founders misunderstand, what they tend to avoid, what changes actually create value. So Jo, thank you so much for being on this podcast. I'm looking forward to the conversation today.
Jo Stapleton (02:25)
Hey, Aaron, thank you so much for having me, man. It's really great to to get back and and have the favor returned, which is cool because we had a really good conversation on the Exit Engine podcast a few months ago too. everybody should actually go check that one out as well because I think Aaron actually has Aaron's talking about me like I'm the expert, but Aaron here obviously knows exactly what he's talking about too.
Aaron Alpeter (02:44)
My my pleasure, man. So you I I tried to to give my summary of of Exeo and kind of the transition you're going through. Why don't you just set the table a little bit? Who is Exeo
Jo Stapleton (02:53)
Yeah, absolutely. No, no, I I think you actually got it pretty right. I come out of the MA world and we are all about these transactions. getting people to be able to sell their companies, have a buyer be able take this transferable asset and move on to, grow it their own way while the founder or the owner
gets a pile of money, goes on and retires and travels the world and whatever. And that's kind of like we what we see as the, model, right? the the truth of the matter is is that what we've experienced so much in this world is ⁓ especially with founder led companies, is that when most of them kind of hit this ⁓ very important inflection point. ⁓ generally when they start making kind of w when their revenue starts hitting the millions of dollars a year.
And the reason that we sort of seeing this, I think this reason this happens, is because you've been spending 10, 15 years sometimes getting to this point. Sometimes it's less. People can obviously hit that quickly. ⁓ sometimes it takes a lot longer. But in general, everybody kind of hits this same kind of inflection point where they have to start making a decision about where they are right now and where they can go moving forward. Many people we work with, and and again, this has brought us to founder-led companies because
The founders are often going through a a a personal transition the while the business is going through a business transition. ⁓ and bringing those two things together and understanding that these two things are happening are what we are finding is really now the sweet spot in terms of these people being able to actually grow their companies into a transferable asset.
Which is not the same as just having a company that's nice and that runs well and makes money, right? and so what we're trying to do is to it it overall is to is to be able to provide an end-to-end process that starts with founder support for wherever they are right now, ⁓ at this thing called the founder's table. and then brings them also, kind of guides them all the way through this process of value growth.
Which is not the same as we know as just the top line revenue of the company or the money that the company generates. But building this into now, building these value levers so that one day when they have the opportunity to be in front of a buyer and the buyer is doing something that we call due diligence, they are not your friend at that point. They are actually trying to bring the value of the company down.
And what your job and what we're trying to help people do is well before that buyer walks in, before there are these big stakes that my entire retirement fund or whatever is going to rely on on some big you know windfall of money from a from a buyer, let's make sure that you're buttoned up. Let's make sure that you have actually have the highest value you can have. And if you don't, let's set a trajectory to try to actually get.
Right. Because the more that you can do to kind of stave off a all the kind of negative and bad adverse reactions, and I've been through almost every one myself, by the way, but basically it is not only to hedge yourself against the the adverse exits, but to be able to create at the desirable exit that you want, however you want that to be. And what most sellers are not aware of is that they can control their own destiny that way.
If they start to change the way that they look at their business and the way that they change their relationship with the business. And that's a big one. And so that's why what we're doing now is Exeo is now really about founders. And it's about founder-led companies, and it's about founders who reach this critical two, five, seven million dollar revenue range where there's lots of money coming over the fence, but this still feels hard. This is still carrying a lot.
Everything is still running through them, right? They are the central figure of the story. And it is very difficult to pry this business and the functioning of this business out of their hands because, well, this is what got me here. And what we're trying to to teach people is yeah, what got you here will not get you there. So what we're gonna do is we're gonna bring together some clarity and some momentum and some value building tools and people that are gonna help you actually build this value.
From wherever you are to this goal that you want to set so that you can have the exit that you want one day, however that is. And that doesn't mean selling the company necessarily. It could mean that you're handing it off to a relative. It could be that you're selling it to your employees. It could mean that you're putting it into a trust. There's all kinds of options, but that's what we're trying to help people do is realize that the way that what you're carrying right now, you don't have to carry this alone.
Right. And that you've got some people that are experts that that can actually help you grow into a valuable and transferable asset that some other buyer is gonna want because it's valuable and they can see it how it's going to help make them money moving forward, not just how it made you money over the last twenty, thirty years or so. Does that make sense?
Aaron Alpeter (07:31)
It does, it does. I I kind of want to focus in on those founders a little bit more because you've talked to, you've worked with, you've interviewed hundreds of founders at this point. What what is it about founders that you'll meet where you say, even though you have a profitable business, even though the the revenue is going up and to the right, you're actually building something that's gonna be very, very difficult to sell.
Jo Stapleton (07:53)
It's not an easy conversation. founders of this stage are protective of what they've built. they are also at the same time a little bit performative. Everybody is kind of right, everything they're doing is being scrutinized somehow, some way by somebody. Okay. And I don't mean like in the details, I mean their responsibility at this level.
Is now not just for yourself, you've got employees, right? Now you feel responsible for them. You've got the other stakeholders in your life, your spouse, right? Your children, people like that potentially who are, whether they know it or not, kind of stakeholders in this whole thing because they're reliant on you and the money that this company is making and and all that. And of course, at some point, that's going to have to stop because why? Everybody exits, right? Somehow.
Some way, someday, you will no longer be running this company. And so the question is, what are you going to do with it? What becomes of it? And we know that but statistically, about 80% of these businesses will just die in the vine. Right? This is a major piece of our economy, right? Nobody's talking about this. All the big unicorns and the AI companies and the whole thing all get the attention where the big money is and the IPOs and all those things. And that's great one day.
But the majority of people who own businesses are down here with us in the five, six, seven million dollar range, which is really good, right? You might be paying yourself two or three hundred thousand dollars a year. You may have been able to take some of that money and put it into the stock market and get the second house and build the retirement fund and all that stuff. But what you don't know is what you don't know. And right now, there's a good chance that your business has enough issues in it.
That a buyer will be able to find ways to devalue it so that when even if they are they they are making an offer on it, right? Or they come to a to an agreement to purchase your company, it's very often not going to be what you want it to be. And people just are just unaware of of the fact that this is a this is a real thing and that there are certain value drivers and certain things that buyers are going to look for because look, Aaron, we know this.
At the beginning of this kind of a transaction like this, the buyers and the sellers are diametrically opposed. They want two different things. Okay. One one sees their business as their life's work. This is the amount of money that I've made. Look at how I've done this. Look at what I've built. As if they're going to take that now and put it on a shelf for sale, right? But the reality is that's what the buyer's buying. The buyer's not buying the past. The buyer is buying what they expect to be the future.
And they want that future to have low risk and high ROI. And if your company and your business can provide that, then you're gonna win. Right? that's where you're gonna get the money you want. You're gonna get the high multiple, all that stuff if you're buttoned up. Sadly, about 98% of people who go through this are not buttoned up. And so what they discover as they go through the process, which is long, hard, and arduous, if they are lucky enough to even
have a transaction or LOI, a letter of intent put on the table for them, is that they're gonna watch the value of the company just get lower and lower and lower as they go through the due diligence process. And then
Aaron Alpeter (11:06)
So let's let's walk
through that. I cause I think like the the the eighty percent of these small businesses are just gonna shut down versus you know, sell. That's a jarring statistic, at least in in my opinion. ⁓ what is it that that is wrong with these businesses that you know, two weeks ago we're profitable and we're supporting somebody's lifestyle to now they're like, this isn't worth anything.
Jo Stapleton (11:14)
One for the other.
Right. It's a very interesting thing. And it's a painful thing to learn. the most common situation that we find people in is that too much of the business runs through the founder. Right. So what got me here was the heroics. Look, I am a founder myself. I've been through every single thing. nobody knows better than me what it's like. Okay. And I mean really what it's like.
to be carrying the weight, to be going through the middle of the night, unsure about what will happen and not have anybody to talk to, not be able to share any of this these fears or these feelings because I'll I'll appear to be that I'm weak or that I can't do something or that I'm failing somehow. This is this is the real emotional situation that these guys are going through, right? And I got I gotta be strong. I got to be out there. I got to do everything and I got to show up for everybody.
As the leader that everybody's expected me to be now, whatever that is. But the truth is, now I'm at a point where my business, I'm making enough money and I have enough stuff going on here that I can't do all this. I can't be the, as my former partner used to say, I can't be the head chef and chief bottle washer, right, of the and the restaurant. I can't do both those jobs well, right? So I have to decide where I'm gonna be and what what is the nature of my relationship with the business. What we're
teaching people to do, okay, is to say that at this point, this around this five million dollar mark or so, you're going to start feeling that, I want this business to be healthier. I want this business to be successful. It is, I'm making money, right? But if you step back from the business for a month, what would happen to the business? Would the business actually survive? Would it be able to run without you? Would all these decisions get made and the whole thing? Because that's the big test, right?
Biggest problem we see is that the founders are too wrapped up in the daily going on of the business. And there's two problems with that. The first is that if you're running inside the business, then the business runs through you. How do you transfer that to somebody else? Right? That's you, right? You are the at the biggest asset. That's a problem. The second piece that goes along with that is that potentially what's happening is that you the value of the company is
is now at a point where the that if you stopped showing up to it, right, that basically you wouldn't be able to actually that that business would stop making money. That's going to be a problem for the future owners, right? And so what there's the that's the that's the number one thing that we see. And so what we're trying to teach people is that the actual answer at this point in time is for you to change your relationship with the business. You're no longer the hero. You no longer have to be the guy
Who is does everything and is up all night and is doing all these things. If you are and you're at this level, you're probably gonna have a problem selling, right? If you are able now to pull back, start to look at how you can work on the business instead of in the business, right? Start to make sure you have key key level of employees who are doing these jobs, doing this work, right?
You can show up and be the guy who who saves the deal at the end. Sure. That's no problem. You can be out there being the face of the business. You can be the guy on the you know, who puts themselves on the billboards or sponsors the little league team is out in the community or all those good things, right? But you need to start figuring out how do you remove yourself. and by the way, at this level after this long, you're probably you're tired, right? You've been carrying a lot for a long time. And so it
feels like the thing I gotta do is control more. The answer turns out to be controlling less. Being able to figure out how to step back, let other people start to fill in the the the gaps, teach, make sure you're teaching people how to do this so you can continue this way, but then and start building up the things, the value drivers that are important, right? I've got top line revenue, but my profits shrinking. Okay, that's a problem, right? I've got a but that's a fixable problem, right? I've got
Customer concentration. One of my clients is 90% of my revenue. Well, that's a difficult problem. ⁓ and something that might take a while to change. So you're gonna want to have some time before you're in front of a buyer to change that.
Aaron Alpeter (15:41)
to the just this this middle million, single digit million piece and and kind of that inflection point you're about, how much of that is burnout from the founder and how much of it's just like the simple math or inertia that those businesses are more complex and even if you weren't burnt out, you just can't get everything done yourself.
Jo Stapleton (16:00)
Look, I think I think you bring up a great word. That word is inertia. Okay. And inertia, right, is bodies at rest stay at rest. Bodies in motion tend to stay in motion, right? And so your inertia is not, let's be careful you're not sitting around doing nothing. Okay. You're not inert. What you are, okay, is you are actually at the right moving forward so fast and you've been gotten so used to getting moving forward this quickly that you are starting to probably burn out. You may not even know it.
Because the signs of burnout, okay, are gonna be things like you're gonna feel high cortisol, you're gonna wake up at four o'clock in the morning, you're gonna feel stressed out, you're gonna have these episodes where you feel like you don't wanna show up. Some people go into this midlife crisis or what we call this dark night of the soul, where you start to kind of lose touch with why you were doing this in the first place. Your relationships can start to suffer, right? And and again, you may have had ups and downs as the business has gone on for the last twenty years, so you've experienced moments like this.
But very often we're in a place where it's it's so hard to carry that you don't know, you start to become paralyzed. And that's the kiss of death, right? If you can't change this thing or you can't move this thing because you're starting to be so tired from it, you need to be re-energized. And what we are do often through our program is actually, whether they sell or not, is re-energizing people because they are starting to figure out, ⁓ this is why I like the business.
I can work, I mean, I can work on the business from a distance and not be involved and not have it be this heavy. Yes, you can. You just can't do it by yourself, and you may need some people to help you. ⁓ and so that's really ⁓ Aaron, why we started this thing called the founders table, right? Because what we realized was that the founders themselves are having a real hard time carrying this alone. And what they really need is support and help from other people who have been there, done that.
Right. And so we've created these groups all around the country where founders who are founder-led businesses is an application process. We don't just let, you know, it's not just for it's not for everybody. It's for a specific kind of founder that wants help, wants to help other founders. And it's all founder, you know, curated groups of founders that are sitting there helping each other work on their businesses. Not in them, but on them. W how can I grow this? How can I solve this particular challenge I'm having? And getting other founders who know what it's like.
to be there, to have to go through, have felt the same way that you have, maybe are they are feeling that way right now. And we find these groups are a really good way to get together for three hours a month and to actually step outside of your usual office or, you know, the the the plant or wherever you're working in a normal basis and be able to actually interact with other founders who can actually give you good advice, help you work, keep you accountable, and get you to a place where you can start to now elevate yourself.
up out of the business, stop being employee number one and now be the CEO of this of this organization. Or realize that you don't have to be and somebody else should have that job. That's actually okay too, right? But either way, this this helps you start to feel like you're more in control. It starts to help you feel solve real problems and you start to actually feel this growth start to happen. And once the momentum happens, you're everything changed. The perspective changes.
Aaron Alpeter (19:04)
Interesting.
Jo Stapleton (19:19)
I don't feel as tired anymore. I'm re-energized. Now I can take this business to the next level because I've got the support that I need to do it.
Aaron Alpeter (19:28)
So just to connect a few things that you mentioned, it it's you know, people have inertia, right? They they are once a busy body, always a busy body. But I think the focus or the purpose of where you're spending that time changes. And that that's really what you're talking about is is ⁓ maybe you're you're still doing quote unquote heroics, maybe you're still staying up, getting up early, but you're doing inherently different things as opposed to just keeping the wheels on. So you've you've used the phrase a couple of times, and I know a lot of people talk about the idea of of working
in the business versus on the business. How would you just clearly separate that for someone if they think, well, you know, I I feel like I'm doing well, I'm I'm doing the right things, but how do I know if I'm actually working on the business versus in the business?
Jo Stapleton (20:10)
That's
great question. So let's take it a look at this way. I don't know how many ⁓ again, there's probably ⁓ many metaphors for this, but one of the ones that I like to use, I'm I'm a fisherman. I like the the notion of being a fishing boat captain. Okay. The fishing boat captain rarely has his hands on a reel. Okay. I'm not at the thing dropping a reel down to the bottom and riddling it up and stuff like that. Okay. My job is to make sure that the boat gets near the fish.
My my job is to make sure that the guy the people who are handling the reels don't get the reels tangled, don't get the lines tangled. Right. My job is to sit up here at the top of the boat, drive the boat, make sure we get to the fish, make sure everybody does their jobs, right? And does not, but is not actually reeling in fish. Okay? That's the cleanest example I could think of of of what we're talking about here. You need to be the guy who's making sure everything happens without
you being the one who's pushing the buttons, right? And that why. The real reason is why. One is your mental own mental health and your ability to be able to cope under the stress and all this stuff. It's a lot when you have to show up 19 different ways to different things. And you've probably been doing that for a long time. So we can that that's the first thing because that's that helps you be able to kind of relax and see the forest for the trees, right? The second thing is.
Then being able to say, I've got people I can trust. One of the biggest common things we hear people say is, yeah, I know, but I don't have anybody on my staff who can really I can really trust to help me do this. Well, that's that's a huge red flag, right? Because again, how do I take this company, pick it up, and have somebody else run it if the if there isn't anybody there that can actually run the show except me? Right? So helping those people find those things specifically.
and and to be able to figure out those ways. So the idea
mostly about if I'm working on it, it's because I'm directing people, I'm having that stuff in it. If I'm working in it, it's I am doing and pushing the buttons and doing that stuff of myself. And that's what we want to try to stop.
Aaron Alpeter (22:14)
kind of circle back to this idea around trust and offloading things and I'm sure you hear this a ton of times. I'm thinking back to ⁓ a few clients that that we're advising they're you know they've got a tens of millions of dollars in revenue. ⁓
And they, are looking to go for an exit, but they're like, I I still like I want to get out of the weeds, but I don't feel like I have the ability to bring people on. And and they may struggle to say, well, if I hire somebody and I pay them four hundred thousand dollars a year, they're not good or not doing it the way that I want it to do. Or if I hire a junior person to train them up, I'm still teaching them all the things. And so talk to me through what practical advice do you have for founders like that that may feel through no
I guess lack of effort on their part that they they don't have that C-suite around them that they can offload things. Like how do you actually go about building that trust and and you know, are you default trust on or default trust off? Like, how do you make that difficult of a pivot?
Jo Stapleton (23:09)
That's a r really good question. And look, it doesn't happen overnight. Okay. So the the first thing is that understand the w we know that when we're dealing with people, we we meet people at these founders table dinners the for the first time. They're kind of like, you know, what's going on here? And where am I? And what's this gonna be like? Because again, they are used to to life a certain way. ⁓ what they find nine times out of ten when they're when they're at these at this founders table events is wow, there's a I I I'm not the only one who feels like this, right?
So the first thing is to be able to know is that it would like any kind of thing is to A, know there's a problem, okay, recognize that there is an issue, and you can feel there's an issue. You just are gonna blame it on something else. So normally what happens is we have people come in and they talk about they've got this big problem. And then after a couple of conversations and some time, you know, with this group, they will suddenly realize, wait, that's not the problem. The problem's down here.
I think I have a top line revenue problem. I need more top line revenue, right? Because my profit's shrinking. So get more top line revenue. Well, that's that seems like it's easy, right? The problem is that what's happening is that the more revenue you have, the more you're gonna leak out the bottom. If you've got a leak like that, that's what's gonna happen. And so again, this is a very simple example just to illustrate the point. But it might be that one most often we see people come in with what they think is one problem, and it turns out to be something
completely different. And most of the time it is directly related to them and how they are interacting with the business. So I gonna come back and say, hey, look, well, you bring up the trust thing. There isn't anybody on my team I can trust. Okay, well, first of all, whose fault is that? Okay, so right there, okay, the buck stops here. Okay. You don't have anybody on your team you can trust because you have a you're bad at hiring, you're bad at delegating.
You're bad at allowing people to do their jobs, you get in the way, you have right. So the that's what that comes from, right? You have a child who doesn't behave, okay? Who's right? Is that the child's fault? Right? So the idea here is that it's a matter of how you probably how you are, the culture you've built inside the business, and how much of it is actually attributable to you as the leader, right? You've built a system over years.
Well why do you do that? Well, it's just the way we've always done it, right? It's it's well, where's this information that you you know how to do this thing that's written down? I don't we know it's not written down. It's in mi Marge's head. You know, and Marge handles all that stuff and that's great, but you don't know how that stuff works. So that's the other problem we see, right? Is that so much of it is delegated that the sometimes the founders themselves don't really know even things how things work either, which is a d a same problem on the other side, right? It's another
Aaron Alpeter (25:58)
Yeah.
Jo Stapleton (25:59)
Issue of being able to create value if you don't know really know what you even have right now. And that's why our process starts after the founders table stuff always starts with this clarity stage because you got to get in after 20 years of business. There is stuff there you forgot about. There is we like to say that the bodies are, you know, you forgot where the bodies are buried. ⁓ but you gotta you gotta uncover these things before a buyer does because the buyer's just gonna see that stuff and either walk away.
devalue things, you know, you're not going to get the terms you want, all kinds of stuff. If you can figure this stuff out in advance and know where you stand and what's really going on and what you can fix and what you can't, right? And by the way, there's no such thing as a perfect business, Aaron, right? No buyer wants to buy a perfect business. Buyers want opportunity, right? They want growth potential. Right. If you've got it all figured out and you've got everything and I've gotten every customer I could ever get, that's that's also not going to help you.
Right. So we could there are these things called marketable inefficiencies. There are things you haven't gotten to yet. That's fine to not get to everything. You'll price the business eventually for what it's really worth. Not just not for what you want it to be, what you hope it will be, and not so that some buyer can come in here and knock the price down. You'll be able to say without doubt, this is what the the value of the company really is, and this is the terms that I want for it because I've
I I have created a a not just a the history of this business, but now a a a business that can be taken into the future by somebody else. And that's really the holy grail.
Aaron Alpeter (27:37)
Yeah.
You know, it it's really interesting because I feel like what you're saying is that the first step of exit planning is some tough love, right? It's it's some humility, it's it's this idea of you're used to being the boss, you're used to people say yes sir, like right away, sir, and it's like let's sit you down and be Hey, you know, here's here's the problem, here's what's there. And as you're talking about kind of these these cultures that you've built and things like it, it reminds me of some of the work that we've done with with some of our clients more on like the
The IBP process, the integrated business planning. What we did is we identified ⁓ five different archetypes for how a company will make decisions. And just to share two of them, you know, you've got companies like Ralph Loren, which is incredibly founder driven. It's command and control. I mean, Ralph Loren, ⁓ there's a guy named Ralph Loren. He signs off on every design that has his his name on it. And still, he's in his 90s, I think, today. And like the whole entity is is organized around pushing.
information to him and then executing his wishes because he's the tastemaker and stuff like that. You've got other ⁓ brands like LVMH where it's much more delegated. It's it's like, hey, as long as you are hitting your metrics for your particular brand or opco, ⁓ we're not gonna bother you. But like you, you know, if you if you don't perform, you're out. And so
Really the the thing here is I feel like you've got understand what culture you've built. And then kinda what I'm hearing for you is like you've got to be able to transition that culture to change it because if you've built a command and control environment
And now you're trying to sell to someone, well, there's a big gamble there. Because if the person who's buying has really strong instincts and can fit into that driver's seat and is just better at command and control, or at least as good as you are, then they'll be successful. But if they have a different style, if they are not a command and control type person, then that organization's gonna have paralysis. They're gonna figure out, just like, well, what are you doing? You're not giving me clear directions, stuff like that. So talk to me about how do you
How do you help founders change their culture? Because it might have been that command and control got you to where you are, but in order to exit, you need to have a different type of culture that probably more closely resembles the type of culture that an acquirer is gonna have.
Jo Stapleton (29:48)
Yeah, look, it's a it's you you've you've hit a huge point. And this this took us a long time to figure out because again, we used to go in talking about exit planning. And part of the problem with talking to exit planning at this stage is people go, yeah, yeah, yeah, yeah. One day, right now, I've got this top line revenue problem that I can't and these fourteen fires I gotta put out. Okay. And so that's the reality of the founder's life at this stage. It is not like sitting back thinking about the future, you know, whatever. Okay. It's no, it's not. It's a grind still every day.
even if it's not, it feels like it is. If I let go, even for a second, all this goes away. Right? Everything I've built, the family, the second home, the kids in col right, whatever it is that I've my dream, the thing that I want to have, my retirement phone, whatever that is, right? Seems like it's ⁓ always potentially right there in danger at any moment of just going away. And so
We're living in this kind of constant state of fight or flight, even though we are, you know, ⁓ making more money than most, you know, third world nations, right? The GDP of right, right? I mean, that's the truth. So money can't be all be about money, can it? Right. And the reality is what we that's why we exactly why we put together these founders table ⁓ dinners, because once you get into a thing and you see you're not alone.
And that everybody else is feeling what you're feeling, and everybody else is kind of in the same boat that way. There are a lot of people doing this. And you've got people who have come across these problems that you think you have, and they've you've solved them, and they've solved them, and here's where and here's how, and you're getting this help. And that's the first stage. We're not in here gonna change your mind. We're not gonna come in here and start talking to you about exit planning. What we're trying to do is to say, look, we understand found.
So let's come in, let's get a bunch of founders together that aren't competing with each other, but are but can support and help each other. Because that's where these things start to be you start to realize these things. Not because we tell you, but because you feel it. You don't in a room, you see it happen. You go, I see what I'm doing now. And that we found is just a much gentler way of being able for people to, you know, start to understand this stuff. Because
so much of this Aaron is about human nature. And I think one of the things that I think the hu the humanness is lost in this kind of transactional notion of selling a company, right? It's been made very transactional. And so the transaction is down there someday. Let's not worry about the transaction right now. That's gonna happen, right? It's gonna happen, it's gonna not.
You're gonna choose it, you're gonna not, whatever. But let's put that down the line. Let's say start with where do I wanna end up? Right? What do I want the end to be? I wanna where do you gonna go? Literally, where do you wanna like where do you wanna live? What what do you think happens? Do you retire? Do you take this money and start another company? Do you have this thing you've always wanted to do? Do you have a a foundation that you want to give money to? Right? There's lots of different ends. So the first thing is.
What's the end? Now let's look at where you are right now for real. Like, like warts and all, let's really understand what's going on below the waterline of the company. So much of our humanness is avoiding decisions. Sometimes it's about avoiding situations. Sometimes it's about just ignoring things. Some people are like, look, I'm I'm right on, I'm head on, and I I hit stuff.
and hit it directly in the whole thing and solve these problems, and that's great. But I can tell you that's very few and far between. Most human beings are wrestling with their own demons. They're wrestling with whatever they are w whatever situation they are they are put in, and they are faking it because we're all faking it. None of us really know what we're doing, right? We all are just human beings trying to get along. We're pattern recognizers. We're people that can are good with other people.
We're we've come up with some amazing kind of technology and stuff like that that we're delivering out to the world. But at the end of the day, we are human beings trying to get along in the world, And what we're trying to show people is that the first step is to sit back, relax for a minute.
Have some food and a drink, right? And get around some other founders who have been there and going through it just like you have, and be able to say, okay, and have them say, you know what, man? Maybe you're holding on too tight. That's where the realization happens. Not because we are out there talking about exit planning on a podcast, right? I always say, I say this every day. Nobody wakes up in the morning going, you know what I need more of? Exit plan.
Aaron Alpeter (34:23)
Yeah.
Yeah.
Jo Stapleton (34:36)
Right? No. They wake up and they go, I have 17 fires I gotta put out today. And if I don't put out all of them, my business might go under. Now, is that really true? Probably not, but that's how it feels. Right. And so that's really where now where we're starting from. And that's been the big learning and by frankly why you know the Exit Engine podcast is now becoming the founders table podcast and things like that. We're making some changes there because we've spent a lot of time in the last few years.
talk, as you said, I've talked to hundreds of founders. And what we've really found out is it's really, yes, it's about the business, but it's really at the end of the day, it's about the founder because the founder is the culture. The founder is the person who has set this stuff up. It's all about this. And when you talk about rightly so, about changing the culture of the company, it's got to start with number one. And that is the hardest thing for people, as we know, for people to do.
Aaron Alpeter (35:29)
what are some of those uncomfortable things that people hold on to, either the conversations they haven't had, the situations they haven't resolved, like you know, what are the top three to five things that are usually on the bingo card when it's like, hey, this is why you're not ready?
Jo Stapleton (35:43)
Right. I think the first thing is that is that again, founder dependence. Okay. So number one out of everything, and it's and it's by a mile, because founder dependence has these other offshoots, right? They they have the founder the founder dependence is a big root cause of a bunch of different things that look like symptoms. Okay. And we just talked about a couple of them. The first is that my hiring practices, how I hire and treat other people, what is the company culture around that, right?
Am I good, am I a good natural teacher? Can I teach people how to do the thing that I learned how to do three years ago? Have I put it, by the way, have I put it into a repeatable practice? Right? Probably not. Do I have an HR person now? Because you probably need one, right? Does it mean have to be a full-time? No, not necessarily. But but there starts to be people with specialties. There starts to be problems that are now of a s of a scale that you didn't have before.
Legal starts to become a bigger issue. Compliance in many cases, right? Now you've got more people, you've got more stuff. Now you got you got more people, depending on what business you're in, you might have compliance things that have to be looked at more stringently. ⁓ the the so much around is actually around people, because again, it's the the people part is the way that the the culture of the business is about the way the people and the way they operate. If you don't have standard operating procedures written down and you're bringing people onboarding new people.
Right? How are you teaching them how the company works? What do we do? What's our process? Sometimes the process is in your head. One of the things, the first things we're teaching people is actually how to write process down. And you would think, right, that this would not be a big deal, but it is because why? The new buyer wants to understand what the process is. Right? You need that you're gonna have to write that down someday. Write it down now so that you know how this.
works and how it unfolds. And when you start to do that, you'll start to find out ways you can make that process better. Right? We get stuck in our ways. We get inert. humans are about homeostasis. They want to stay wherever I am right now. It's much safer to stay here than it is to change and to move out. And so what we're trying to help people do in so many ways is to say maybe some of this has to do with me in the
In the process of making this company more successful and valuable, I need to make some changes in myself about how I what kind of leader I am. And I need to be able to, I need to remove myself. So if you make the priority removing yourself from the business, just that one thing, you will start to examine these little things that that require that that are going to need now need to change as a result of that. So that's why we're trying really trying to tell people at the beginning is.
Imagine your life when you didn't have to show up to this business every day, but the money was still generated.
Aaron Alpeter (38:35)
you're right, like the the dependency probably is the canary and the coal mine because I I assume that if you actively work on removing yourself from the business, you probably look at this and say, all right, maybe I do have people around me that I can trust. Well, now I have risk if they leave, right? And so what does it look like from a bonus perspective or a compensation perspective, you know, make sure this is where they want to be. And and so I think that you kind of start pulling in all these sorts of threads that
Jo Stapleton (38:50)
Well other.
Aaron Alpeter (38:59)
people probably don't want to think about.
Jo Stapleton (39:01)
It's true, but all of them are also many of them are directly tied to value. Okay. And so it's not just about can someone else make these decisions and g can this business run without me? As you were pointing out, it's also like there are things like there has to be everything has to be written down. We have to know what the process is. We have to have guides that say we do this, then we do this, then we do this. Right? That's the stuff so that we can bring new people on and they can learn quickly and get up to speed and and we don't miss a beat. Someone
God forbid quits and goes away or whatever. How do we replace them? Right? What's the process? Is it me as the founder? Am I interviewing people? Am I the one who's making the final decision? Am I the by am I involved in the decision at all? Should I be? These are the things that start to open up as you start to have these conversations. Because it is, if we if I asked you how many parts of the business, Aaron, run through you and you sat there and went, my God, like everything?
Right. That's you said, as you said, right. That's the canary in the coal mine. That is actually the issue. There are many, many, many, many stripes underneath that that will can can be examined and should be examined and things like that. And of course, our one of our in our clarity process, we're doing a 30 day what we call the 30 day s ⁓ value diagnostic. And what we're able to do now in 30 days, it used to take a lot longer, but now with some AI, we can do some analysis work pretty quickly.
But we're we're gonna take a deep dive look at your business the way that a buyer would, okay? But we're gonna do it now where there's no stakes. And we're gonna interview everybody, you, your employees, your clients and customers, your supply chain people, right? And we're like that. We're gonna examine every single individual part of your business and we're gonna give you a report back that not only says here's where you're deficient from a value standpoint, okay, but also
Here are the things that you can do to change that value over time. And we'll give you a roadmap way to do it. And we'll do it in a way in which you can see this is the high value, low effort things first, right? And do it in a way over time that will actually build your value smartly, right? And at the same time, what's happening is you're just building a continuously scalable now and valuable sustainable company that can live without you. And
You sell it, you give it away, you put it, you give it, you sell it to your employees, whatever. There's so many options there. You get an investor, you make an acquisition, you buy another company. You have no idea the options that can happen when you are not sucked into the day-to-day operations of putting bait on a hook and dropping a line down. You need to be the guy up here who says, okay, drop your lines, go fishing, everybody. I've made sure the fish are here. Right? That's the role you want to have.
That's a transferable role. That's a company. Underneath that's a boat and a process and the whole thing that you can hand to somebody else and they can run it too. Right? That's the that's the holy grail.
Aaron Alpeter (42:00)
Jo, this has been really fun. I can't believe where the time has gone. So thank you so much for being on. I've got two more questions for you. The first one is what are some actual levers that you see these founders able to pull on that drive meaningful value?
Jo Stapleton (42:03)
Yeah, absolutely.
The first thing is that so we talk about and again founder dependence number one by far. Okay. But the next one is about maximizing. So here's one big problem, right? This is again a dichotomy. You have been managing your businesses to taxes, okay, because you want to make sure you're maximizing the the money you take, but you want to minimize your tax exposure. And that's a that's a very common situation for a small business, especially in LLC.
Now you're in a situation where you're hiding the value of the company. Okay. And so now the exact opposite take is now sort of you start to need. Okay. So one of the things you have to do is you gotta kind of keep your tax liability low, but you gotta not hide the value of the company. Right. That becomes a trick. It's about then as accounting things. It's changing from cash accounting to gap accounting. It potentially could be changing from an LLC into an S-Corp.
There's all kinds of things that that that potentially go in there that will allow you to keep the, you know, take your take your money home that you want to take home, but be able to actually and and keep the tax burden low. But there's also now you've got to have, the value of the company has to be there. So that's another thing that again, people completely right, forget. I've been managing the businesses to hide value, right? Because from the IRS. And now I've got to turn around and go, no, no, wait, wait, all that
That's where the epitaph adbacks come in and things like that. Right. But so that's another one. I think the next biggest one we hear all the time is I need to sell if I could just sell more and make more money, all these other problems would go away. And the reality is that is so not true and it's the biggest trap going. Because the reality is again, your value is not based on your revenue. Your value is based on your profitability, how much
How much cash can you generate on a regular basis and with what to what amount of effort? Okay, because again, at the end of the day, someone's gonna take this and make a repeatable process. What you want is a cash printing machine. This is how I make money. I pull this lever and money comes in. I pull this other lever, right, and money slows down. Whatever it is, that's the kind of control you wanna have over revenue.
But you've got to have that control at the bottom of the revenue thing, not the top. I want profitability. I want to make sure that I'm running efficiently. So no matter how much, and then I can scale that. But if I scale chaos, which is what most people try to do, that's why it's so hard. Right? So that's the that's the third thing we want to r look at right away is how are you what is your process for generating money and how how how long does it take?
Aaron Alpeter (44:54)
Yeah.
Jo Stapleton (45:05)
What's the process? And there and remember, in that, just that one thing, and I just want to point this out to people, there are 17,000 little tiny little like steps in the way of that. And I'm I'm obviously exaggerating, but the idea is to say that within the process of collecting money is a process. If you don't have a good process for collecting your money, right, and you're letting things go 30, 60, 90, 120 days out in the whole thing.
That's a significant problem with your cash flow. That is eating into your profitability. It is right. And and that's a that's something that is someone is going to look at and go, wait, you guys can't why can't you collect? Why can't you get your bills paid? Right? ⁓ we yeah, I'm so I don't want to bother them. I mean, there's almost so many things that go on. People are afraid to ask for money. They're afraid to go to their clients and make them pay. There's all kinds of things that go on out there. And what we're trying to do is just to say to people, hey, look, first.
Come to a dinner, take, take a load off for a second, hang out with other people who get you. Okay? That's the first step. The next step out of that comes, ⁓ some clarity about myself. yeah, look at me. Maybe I do have this issue. Now we can deep dive into the business. Now we can take a look at the whole thing and go, where what do you really have? What is its real value and saleability? Right. And can this something be something move forward? And if not, how do we fix it over time? Right?
And then we'll go and we'll bring the people in to actually help you do that. Right. We can't be experts in every single thing, but I but we have all the experts you'd ever possibly need to be able to actually make these changes, right? To get to a point where you actually in a measurable way, here's your value and saleability. And by the way, the buyers we know, they're all sitting here looking over our shoulder, waiting for these companies to be in a spot because this is what people don't know either.
There are not enough companies for the buyers to buy. And our our job is to try to make those companies exist and that more buyers can buy. And when that happens, more transferable wealth, more people, with with their companies that will actually survive new ownership. and they're actually making generational wealth for themselves outside of the stock market, which we now, really can't.
Aaron Alpeter (47:00)
Mm.
Jo Stapleton (47:21)
Trust right now, right? Something big is coming. And if you don't have a transferable business right now, I don't know what's I don't know what's gonna happen, is all I'm saying, right? So that's that's really where we are.
Aaron Alpeter (47:22)
Right.
Jo, this has been fantastic. I feel like we could go for another hour. ⁓ I I hope to see you at a Founders Table dinner sometime soon,