Every business owner needs an exit strategy.
Wanna find out why you gotta join us for this episode of the Inside
BS Show? Hey, now I'm Dave Lorenzo, the godfather of Growth.
Here with me today is Nikki G and we are talking about exit strategy.
That's right.
We're talking about why you as a business owner need an exit strategy,
and if you're an advisor,
why you need to share the exit strategy secrets we're
going to give to you today with your clients. Thanks for joining us.
It's great to have you here. Good morning, Nikki G, how are you?
Good morning, Dave. I'm doing great. How are you?
I'm doing fantastic, thank you. Alright,
here's what we're going to do today.
We are going to cover the seven questions that we get most
often about exit planning.
And we're going to do that so that you have a good foundational
understanding of why we do what we do, why you do what you do,
why we do what we do, and why business owners need us.
So, Nikki G question number one.
What is an exit strategy?
Great question, Dave.
An exit strategy is having a planned approach as a business owner to
transition out of the company. There are a number of ways to do that.
Oftentimes we see the sale of a company or we see a transition in the ownership
shares of a company,
or we may see a winding down depending upon what's going on with the business,
but it's having a plan in advance and not allowing that to unfold as you are in
an exit that's occurring at that time.
So having a plan in place and making sure that there's a nice smooth transition.
So what we don't want to see with an exit strategy is a bumpy road, right?
You haven't planned for the exit and now everyone is adjusting as everything's
unfolding. If, for example,
you've announced your retirement abruptly or something has happened that has
caused you to have to exit the business.
Another important component of this for us, especially in exit success lab,
is driving up that business value. So having a plan in place,
having it in place early,
allows us to drive enterprise value in that business years in advance of that
exit and ensure that smooth transition. So Dave, let me ask you this. Well,
we'll move to question number two,
which is really related to what I just discussed. You know,
why is it important for everyone to have an exit strategy?
Uh, that's such a great question. So there are,
there are a couple of reasons why it's important for everyone to have an exit
strategy. The first is for contingency planning purposes.
So what, what's gonna happen, you're the business owner.
Let's say you're a sole practitioner, first and foremost, or you're,
you're a solopreneur and you have, maybe you have a team,
but it's just you leading the charge. If you get sick,
who's gonna run the business?
If you need to take time off to tend to a family member who's sick,
who's gonna run the business?
If you wanna go cruise around the world for 90 days,
who's gonna run the business?
So contingency planning purposes is the first reason you need to have an exit
strategy.
The second reason you need to have an exit strategy is to maximize the
value of your business.
A business that can't run without you is a job. It is
not a business.
We've all heard the Michael Gerber E-Myth strategy
of working on the business, not working in the business,
and that's great.
But what Nicola and I focus on with our clients is working
over the business, treating the business like an investment.
So if you don't have an exit strategy, your business can't be an investment.
'cause your business is dependent on you.
What you need is a well thought out plan.
That's a roadmap for the change that's gonna come,
whether you like it or not, voluntary or involuntary.
If you don't have an exit strategy,
you're gonna be forced at the end of the day to take less
money or maybe even no money when it's time for you to wind down the
business. So contingency planning is one reason,
and the second reason is so that you can have the most options when you're
ready to ride off into the sunset.
And even if you don't wanna ride off into the sunset,
you need to have some sort of a plan in place so that that investment can keep
paying dividends to you while you go do your thing cruising around the world.
So let's get into this a little bit deeper. Nicola, talk a little bit about,
if you will,
contingency planning or planning for an unanticipated exit.
Sure.
Oftentimes we see that unanticipated events can occur in a business and it can
immediately stop the business if the owner's responsible for the majority of the
functions or other leadership is.
So having that plan in place allows you to avoid those disruptions in the
business and continues to build value for you. So, for example,
maybe the owner has a sudden illness, gets in an accident,
or unfortunately has a sudden death. Now, when that happens, that's it.
Business comes to a halt without a plan. So having a plan that incorporates,
for example, having interim management to step in that knows what to do.
So it's, it's not only the people, but it's what do they do?
So having a plan for operation so they know what they will be doing
ensures that the business can continue to run as smoothly as possible given the
disruption. Having that plan also helps you with your customers,
with your employees, because when there is a disruption to the business,
all of them are impacted. It's not just the leadership of the organization,
it's everyone you're working with.
So you don't want to have that business look like chaos is going on,
and we can avoid that largely by having a plan in place. Of course,
there'll be minimal disruptions,
but you can largely avoid that by having that plan.
Let's move from contingency to your, your actual exit plan.
So let's talk about Dave,
like what are the three exit plans that a business owner should have in place?
The three mandatory exit plans that we make all our clients put in place really
relate to what you were talking about, uh, when it came to contingency planning.
So I like to look at an employee ownership option,
a management buyout option, and a CEO replacement option.
The employee buyout option for larger businesses.
So businesses that probably have north of $5 million in
EBITDA or north of $5 million in pre-tax earnings,
probably north of $10 million in annual revenue.
You can look at an esop, an employee stock ownership plan.
That's a great thing to have in place,
a great contingency plan to have in place.
'cause you can trigger it anytime you want.
It can be triggered at an event that occurs where you need to get
out as an owner in short order. So ESOPs,
the challenge with them is they can be a little pricey.
H hiring really good advisors, attorneys, trustees,
getting everything in place. It can be a little bit expensive to set up
upfront.
So you probably need to be a larger business in order to have that.
Now there's another option called an employee ownership trust.
And I've also done some really interesting things,
particularly in the professional services space with creating a
pool of shares for employees to draw
from or for,
from the partners to grant shares to employees so that there
is an employee ownership opportunity.
That's a great thing to have in place because the employees can then take over
ownership. It's a great retention tool, and the employees are vested.
The employee's behavior reflects their overall investment in the firm,
and it is a really great opportunity for them,
and it's a good tool for you as an owner.
The second contingency plan that we want to have in place,
mandatory exit plan is a management buyout. The reason that I
talk to business owners as early as possible about a management buyout is
because you will hire and select different people
to bring into the ranks of your management based on the fact that these
managers are someday going to be owners of the company.
You're not gonna hire,
or you're less likely to hire a manager who's just a temporary
sort of stopgap. Just keep the lights on type manager.
If you are counting on your management team, hopefully to someday buy you out,
you'll be focused on bringing in people who you would consider more along the
lines of partners or potential partners or future partners.
So focusing on a management buyout,
even if it's an unstated management buyout.
So you don't have to tell them in advance, Hey, one day all this will be yours.
You don't have to do that if you don't want to. But having that management
buyout option in place for you with a
focusing on having that mindset in place is a great way to
prepare for the future. Now I know what you're thinking. Hey, Dave,
if all my managers were capable of owning the company,
if you know I'm gonna sell the company to my five key managers,
I probably would have to pay that type of person a lot more.
I'm not saying that every key manager in your company needs to be ownership
material today.
If you're not planning for your exit for 10 or 15 years down the road,
start with your top one or two people. Say to yourself,
could I envision myself as I bring this person on board,
eventually giving the keys to the company to this person? If the answer's yes,
you got a good foundation, you got a good start. So you top sales person,
your top operations person, your top sales person, your top finance person,
your top operations person, and your uh,
your top business development person,
those people are the people who could be the foundation for a management buyout
in the future. That's a great way to think about it.
The third and final management strategy that we wanna have in place for an
exit plan.
The third and final contingency strategy that we want to have in place for an
exit plan is what I call A CEO replacement strategy. Now,
this is an in case of emergency break glass strategy. What it is,
is it's a relationship that you or your HR person or a
combination of you and your team leaders have with a
recruiter, a headhunter,
and that person is a specialist in sourcing CEO
candidates or outsourcing temporary CEO candidates in
some industries,
these these firms may be called seekers where they'll invest in the company and
put a CEO in place.
You need to have an option for someone in your company to go out
and bring in a temporary or fractional CEO to
run the company on a day-to-day basis. While the management
team or your spouse or whoever is your,
uh, your whoever are your heirs,
will find someone to replace you to kind of shepherd the company along
or to put in place a sale so that the company can be
guided toward the exit if you suddenly happen to
pass away or are incapacitated. So again,
that CEO replacement strategy is finding a fractional
CEOA temporary CEO or a headhunter to bring in a fractional
CEO or a temporary CEO guided by the person who
is going to inherit your shares should you become
incapacitated or die. So, employee buyout, management buyout,
CEO replacement strategy,
those are the three exit plans we want all business owners to have in place.
And it's, it could be as simple as having a,
a book a notebook with these plans written down in it,
or it could be as complex as a formal written plan document
with a copy in the hands of your corporate attorney,
another copy in the hands of your exit planning attorney and a third copy in the
safe in your office. That's what you need to have in place right now.
So if you can hear my voice right now,
if you're watching this on video right now and you own a company,
those three strategies should be in place today.
If you don't have those three strategies in place, give me a call,
give Nicole a call. 'cause you gotta get 'em in place right now. Nicole,
you have any thoughts on that before we move on to the next question?
I think you did a good job of explaining that. I think so just to highlight,
these are really the internal exit strategies that we focus on in our business.
So we have both,
we have internal and external exit strategies that we want business owners to be
thinking about.
All right,
so now let's touch on the three external sale
options for our business,
the three exit strategy options for our business that are external.
And these are the three that we talk about the most. One of them,
multiple of them or all of them may be appropriate for you. Nicola,
why don't you go into what the three external options for an exit strategy
are for business owners?
So the first that we, uh,
we talk about in this community is a sale to a strategic.
And what that simply means is a sale to a competitor,
or it could be a company that just is interested in the business and will have
synergies with it.
There is an entire market that your business may be sold to
because it has value to those particular companies, especially competitors.
Oftentimes we have these conversations, we see that, you know,
o owners will just view the competitor as,
as such that it's just someone who's trying to eat away market share and take it
from them.
But oftentimes we see those competitors come around and approach those owners
because they want to purchase the business,
given that it could help them generate more revenue in their own business.
So think of it as just finding a,
an entire market where you will receive a higher value for that business because
your business is particularly valuable to them. There's a value there that is
not market wide.
It is because that business will have some overlap with yours and will see
additional value in it that the rest of the markets will not see.
So that's option one.
Option two for us is a private equity sale. Now, I know what you're thinking.
This is, this is the gold standard.
Every business owner wants to sell to private equity.
We have this discussion all the time. It's can you know, can we get there?
And I think there's a lot of folks that think that there's a significant amount
of private equity sales occurring in the market, and that's not the case.
So this option is a great option,
but it's going to be one that is not as common.
And the reason for that is because those companies are looking for very specific
businesses to buy.
It has to make sense for that particular firm. It's gotta be in a space where
they're building, for example, maybe you,
you could be an add-on to another company and that they're putting together a a
group of companies or you could be the platform to which the others are getting
added on,
in which case you would receive even higher value if you were the platform
company. But private equity is very specific, what they're looking for.
There's certain industries that they focus on in particular,
and that also works with the market. So it could be, for example,
home services businesses that private equity firms are after.
So they're looking for a group of those in the market, gobbling them up, uh,
depends again on market factors and, and what they're after.
But that sale to private equity certainly is going to take a strong
look at, you know,
what your key drivers are and how well they're performing. We're going to get
into that in a little bit more detail, so I won't dive too far into that.
But that's going to matter for private equity.
They are really going to scrutinize every aspect of your business to see,
you know, are you operating in a way that is going to make sense for them?
And if you are, then that your business may be considered for that sale.
And if not, then maybe it still will be.
But there's going to be significant discounts associated with it if it is not on
par with what they are looking for and all of these different drivers.
And then finally,
the third sale option that we look at for an external sale is going to
be in public offering.
So an initial public offering or taking the co the company public,
that is not for a lot of companies, that's,
I would say that's the least common option because there are a lot of factors at
play there,
whether the company even wants to consider going public and also can the
business allow for that to happen. Most of the times you're looking at a really
high growth company that's going to be even considering going public. Um,
if that is a consideration for your business, it is incredibly complex.
There's a lot of regulation involved.
There's going to be a lot of legal work involved. It's, it's highly,
highly complex to be able to take a company public.
So not an option that most folks would be considering,
but certainly one that we have to consider with the businesses that we work
with. So again,
those options are going to be strategic sale or sale to a competitor,
a sale to private equity or an initial public offering.
I feel like the IPO option was incredibly popular
in the eighties and in the nineties before private equity really burst
onto the scene and was focused on, you know,
grabbing companies and combining companies and doing those
sorts of things. I I actually was part of, uh,
an IPO, one of the companies I worked for was part of an IPO. They ,
they went public and then they were immediately bought by Marriott right after
they went public.
The whole purpose of them going public was to make the purchase by Marriott
International easier for them. And it was,
the business at the time was, you know,
it was significant, but today it would have to be more significant.
So kind of the rule of thumb to think about is if you wanna think
about an initial public offering,
your business should probably be doing 75 or a hundred million
dollars in annual revenue in order to even think about it.
Even then, that would be kind of a small initial public offering.
You're probably going to be pursued pretty heavily by private equity funds if
you grow the business to that level.
And their offers may be quite generous,
probably more generous and, uh,
slightly less onerous than an IPO.
So my thought process is strategic sale or a sale to private
equity. That's what most business owners are looking at. They're, they,
they have an eye toward. But to be candid with you,
if you are doing 75 a hundred million dollars in annual revenue and you want
to run your business like you're preparing for an IPO,
a private equity sale will be it. You'll be able to,
you'll be able to get through the due diligence period with a private equity
sale. Those of you who are listening here,
you're probably not running businesses of that size. So strategic sale,
private equity sale, IPO, those are the three. All right, let's talk now Nicola,
about the 10 drivers of enterprise value.
'cause one of the questions we get all the time is,
what are the 10 key drivers of enterprise value for any business?
And people wanna know how each of those kind of fits into
exit strategy and exit planning.
Why don't you take the first two and we'll go kind of two by two and cover each
of these,
just touching on the tops of the 10 drivers of enterprise
value as an intro for our folks who are listening,
the folks who are watching today.
Of course. And so to be clear,
the 10 key drivers are those that we've identified in exit success labs.
So this is not, you know, just a, a market 10 key drivers.
These are our 10 key proprietary drivers that we've identified that we believe
apply to any business in any industry,
and regardless of where it is in its lifecycle. So that first one,
the first one is there for a reason in place number one,
which is your diversity and quality of revenue streams.
You hear us talk about this often and we can't talk about it often enough given
how important it is for driving profitability and revenue, the business,
when we say quality,
we're looking at what's the quality of the customer base and do we need to,
for example, diversify that customer base because for example,
the business is too dependent upon a single,
a single customer or a single set of customers. And then we also look at
diversifying the revenue. So diversifying the revenue in different ways,
for example, like geographically for example, by, you know, other businesses.
So it's,
it's focusing on both aspects of that and making sure that your revenue is not
coming from a single source,
but you have multiple streams and that revenue is recurring in the business so
that you have predictability in the revenue stream.
Second point we look at is leadership development and management succession,
making sure that you have a plan to develop the leaders that are already part of
the organization and have a management succession plan is what is going
to drive the growth, not only the growth of your business, but sustainability.
So this is really kind of the,
the core group that's going to keep that business where it is and moving
forward.
So it's important to have both in place a plan to have leaders on the track to
develop, so you know, you're investing in those employees and for management,
having a plan, having a succession plan in place,
which is something else that we work on with respect to the second key driver.
So Dave, let me turn it over to you for key drivers three and four.
All right, key driver number three is standard operating procedures.
This is something that I like to beat the business owners over the head with.
People need to have guidance for doing their jobs.
If you don't have a plan in place for how to do every
single task in your business, you're leaving money on the table.
Start with the biggest tasks and narrow them down.
Have the people in the organization write down step by step how they do the
most important things that they do day in and day out.
Then get granular,
continue to develop and improve these standard
operating procedures on a regular basis. Document them,
have them written and put them in.
You can have them in binders in each department in your business.
You can have them in the hard drive that is onsite.
You can have them in a file on the cloud. You should also have them in your
knowledge management system.
You should have these standard operating procedures in as many different
places saved and updated as regularly as possible so that people
coming in, whether it's new employees, new managers or new ownership,
can read through a standard operating procedure and have a guide to doing
any job, any task, any role in the company.
I can't stress enough how valuable these standard
operating procedures are.
It can add literally points to your bottom line.
You can get more money for your business if you have standard operating
procedures in place because new management coming in will be
able to look at them, read through them,
and evaluate the people who are doing the work.
Standard operating procedures are great for the ongoing
managing, uh, and leading of your team,
but they're also great for when you're ready to sell the business. So one of the
top things,
fastest ways to improve the value of the business is by documenting
the standard operating procedures that are already in place.
Number four is human resources best practices.
So every business is a compilation of
the talent of the people that work in that business.
How you recruit, hire, retain,
engage the talent that is part of your company is
it's, it's critical to the success of your company overall.
So your policies, your practices related to hr,
that is the fuel that makes the company go.
Who do you select? How do you select them? How do you find them?
How do you onboard them?
How do you make sure they stay engaged and they're successful?
What's your performance appraisal process look like?
What is your training process for your people?
What's your training process for your managers?
How do you determine who becomes a leader? All of these things are HR
practices plus all the admin aspects of your HR practices.
You need to have these buttoned down. You need to have them nailed down.
Now there's a shortcut. If you're a smaller business or a mid-size business,
you can bring in, uh, A PEO, you can bring in a, uh,
a professional employer organization that will work with
you on a, almost like a co uh, a co, um,
ownership basis of your employees.
And they will manage all the administrative aspects of your business for you.
You still have to be a leader. You still have to engage and train your folks,
and you still have to have policies and practices in place.
So my advice to you is when you grow to beyond 10 or
15 employees,
look to bring on someone who is focused on employee engagement,
employee recruiting, employee retention and onboarding.
Even if you decide you wanna help have someone help you with the admin
functions of your human resources best practices,
no matter what you do, this is gonna be an area that is scrutinized,
that is poured over by someone who's looking to buy your business.
So you better have these in shape in your company from day
one. So those are the first four. Now for number five,
we're gonna turn it back over to Nikki G for something that's near and dear to
her office.
That's right, legal risk and exposure, .
So there's two aspects of this.
So the first of course is identifying and minimizing the areas of risk and
exposure in your business because you want to avoid disruptions and expense.
So are you in compliance with all the laws that are applicable to your business?
Are you reviewing regular policies and procedures that are in place?
Hopefully you have policies and procedures in place.
Are you keeping up with changes in the law and making sure that the business is
in compliance with those? Because when you fall out,
that's where you can become most vulnerable, most vulnerable to disputes,
lawsuits and disruption inside of the company.
And that's what's going to not only cost money for the business, but time,
time at the C-suite level, the managerial level, the employee level.
I mean I've seen it all. And you,
the last thing that you want is a lawsuit because that's really where everything
comes to a halt and time is being spent on that rather than keeping the business
running. Now the second aspect of this that I think is often overlooked that
we focus on is how this drives value for a business.
So by the time you get to the due diligence phase because you're ready to have a
successful exit of the business,
this is going to be heavily scrutinized and anything that is a problem is going
to be exposed there. For example, do you have pending lawsuits?
Are there threatened lawsuits or are there just problems with the documents that
you have in place? Maybe they're dated,
maybe you're not in compliance with some of those areas of the law that you
should be.
And that's going to cost a business owner a lot in due diligence because you're
gonna have to go back and fix those issues.
That sale is not gonna go forward if there are legal issues associated with that
business because a buyer is not going to want to inherit the problems. So that's
going to cost time and,
and certainly in terms of a setback for what the timeline is going to look like
for that sale,
and it's going to cost an investment to make sure you're correcting all of it.
So taking care of these now and laying that foundation as you're moving forward
in a business is going to save you a lot of time and expense in the long run and
prepare for that successful exit. The next driver on our list,
number six is brand reputation. Your brand is a powerful asset.
That asset can have its own independent value when you're looking at the time of
a sale,
depending upon how strong that brand has become and outside of its value,
it has value with your customers. When you have a strong brand,
people want to do business with the company,
they start to recognize the company,
there becomes a familiarity and level of trust in doing business with the
company associated with that brand.
So using that brand allows you to engage with your customers and be able to
retain customers in the long term.
So that's why we focus on brand reputation and developing a powerful brand
because, and again,
adding value to that business by the time you're at a successful exit and
helping you with that customer base and making sure that you're developing
credibility with your customers and have that loyalty so that they stay with you
in the long term. Dave, lemme turn it over to you for seven and.
Eighth. All right,
nu number seven is sales and marketing systems and
support.
Where is the money gonna come from if you don't know your business isn't
worth? Well, it isn't worth anything.
You need to have a system and a process in place for identifying, finding,
uh, attracting, closing, and onboarding new customers.
So your sales and marketing systems and support is critical.
You need to be able to highlight the customer journey all the way through from
the time when you suspect they might be a customer to you, to,
when you convert them into a prospect, they raise their hand, say, yes,
I'm interested in what you have to say,
I want to hear more to the time when the prospect converts into a client,
to the time when a client becomes a repeat client,
until the point where you can measure client lifetime value.
All of that is in your sales and marketing systems and support. If you don't
have systems in place, your business is not saleable.
We need to know where your next dollar is gonna come from.
Sales and marketing systems. That's what will help you be able to point to that.
That's what's essential for you to have in place.
And the better your sales and marketing systems are,
the more money you'll get for your business overall.
Number eight is market, industry and supplier conditions.
Can you imagine if you had a business that was dependent on
one supplier to provide you with raw material to make your
product or your service, and then that supplier for whatever reason,
had a disruption, they closed down, they went bankrupt,
they went outta business,
there was a pandemic where they're located and they were no longer able to
produce for you.
Your business would come to a halt until you could find another supplier.
So analyzing market,
industry and supplier conditions is critical.
And you need to be able to adapt to the market dynamics that are constantly
changing, having a plan in place,
a primary supplier and a secondary supplier,
a market where you're doing business and a secondary market where you're also
doing business.
Industry focuses where your clients are concentrated and
secondary industry focuses.
Having alternatives in place is a really good thing.
The more diverse your market penetration is,
the more diverse your customer concentration is.
The more diverse your suppliers and supply chain is,
the better off your business is, the higher the value of your business.
So we wanna look at market, industry and supplier conditions.
Make sure that you're not concentrated in any one market.
You're not dependent on any one supplier.
You don't have any one industry that is providing you with all of
your revenue. All right, Nikki g,
bring it home for numbers nine and 10 on the 10 drivers of enterprise
value.
All right, number nine, financial conditions and reporting. So here,
this is the health of your business.
Your books show the health of your business.
It is incredibly important for you to make sure that those books are done
correctly from an accounting perspective. And everything there is nice and neat.
That is often the first stop in due diligence is let's look at what the
financials show. Why, because we need to see how healthy this company is,
how profitable this company is, and what's been going on.
And oftentimes we have a partner we work with in our community as,
as you all know, Roski corporate advisors.
And they work with a lot of businesses,
including very sophisticated ones whose books are a mess.
And it takes time to clean all of that up. It's,
it's often surprising because you assume that more sophisticated businesses,
larger businesses have all of that in order. That's not always the case.
And it takes a long time to be able to go back and to clean up those books to
make them to the point where they're nice, neat.
They show that the company is nice and healthy by the time you get to due
diligence. So very important to be focusing on the books,
making sure they're done right,
making sure they're done in the right accounting standards too. So for example,
if you end up in a trans, a private sale, a business,
there's gonna be a quality of earnings report that's done.
And that's going to look at, you know, what accounting have you used?
Have you used gap principles for accounting to make sure that your business is
in compliance with those? And if not,
then you'll likely have to go back and use that. So again,
just making sure those books are nice and in order is going to be a an early
stop for you. So make sure that's done. And then finally, driver number 10,
the one that should be keeping every business owner up at night,
which is cybersecurity risk and information Technology systems.
This is all about protecting your digital assets.
So are you protecting your data properly?
Are you protecting the systems in your company properly?
There's always going to be cyber threats out there. For example,
we are all susceptible to phishing, to malware.
Things that are out there every day trying to get our attention and to get us to
click on that link are going to happen. It's just,
do we have that plan in place to best protect ourselves against when that does
happen? So we look at just high level,
we look at three different areas when we're dealing with cybersecurity,
we're looking at the human aspect of it, which is the people.
Have you provided education and training for those in your company? Do you have
policies in place that are going to help you implement the guidelines that
you've identified to use to protect that information for the company? You know,
second, we look at the processes.
What are you doing in order to make sure that's protected?
And then finally the tools,
like what specific tools are you using to help carry out those processes and to
make sure that you are protected.
So an area of business that should be keeping everyone up at night and that we
ought to focus on because of how important it is.
And you've gotta have a plan in place. That's the biggest takeaway here,
is having a plan in place and having a multi-layered defense system really.
'cause it can't just be one thing. It's not simply, well,
we made really strong protected passwords, or we have a firewall.
It's holistic system that really works together to protect that business.
And it's gotta be layered because if any one layer fails,
you have multiple backups to help save you and to help save your information
from being exposed or being lost altogether.
Great job. Really well said. Okay, so the final question is,
how does a business owner determine which driver of enterprise value to
focus on first? You know,
I will tell you that the best thing for you to do is to
go through all 10 of these and prioritize them in
order of exposure.
So prioritize them in order of where you are most deficient.
Rank them one through 10,
and then next to each of the drivers,
write the name of the person in your company who would be responsible for
fixing,
shoring up or managing that key driver of enterprise
value. Now, don't be,
don't be panic stricken if you don't have a person in your company for every
single one of these,
this is the point where you call us and we will help you look through
each of these drivers and we can connect you with professionals who work in
each of these areas. Nicola and I,
we do some of our best work in two of those 10 areas, but if we're really busy,
we may recommend other people to do the work in those areas anyway.
So that's the reason why we've built the Exit Success Lab
community.
And that's the reason why the consultants that we work with are
so important.
We do not work in all of these areas.
We may come in and do an overall audit,
and that's the second point I wanna make about this.
If you're not sure where to start, you can call us.
We'll come in and do an overall audit. It's very much like a strategic plan,
which is also something that we do in Exit Success Lab.
We'll look at all 10 of the drivers and we will rank your exposure for
you,
and then we'll sit down with you and decide what you should start on and where
you should start and who you should call. But the consultants that we work with
are critical because they're the ones who help the clients fix each of these
areas.
Our focus is on helping business owners grow and helping
business owners scale their business and helping them do so in a way that gives
them the most options when they're ready to exit.
So if you're listening to this podcast or if you're watching the show
and you are concerned about
growth and you're not at all worried about an exit,
this is something you should be focusing on because it's,
it will help you grow faster and it will help you create a more valuable
business. It will help you create better, stronger,
more durable revenue streams that are predictable.
If you're thinking about an exit, but it's 10 or 15 years down the road,
that's the perfect time to call us. By the same token,
if you're thinking about an exit in a year,
you need to call us right away because there are some things we can do
immediately to help increase the value. So determining which
driver to focus on first really is dependent upon three
things. Number one,
what your biggest needs are as a leader and where you think the biggest exposure
is. What's keeping you up at night? Number two,
what your intention is for the business wanna sell tomorrow.
There's drivers that we can focus on that'll increase the value of your business
from today to six months from today in a dramatic way.
We can help you do that really, really quickly.
If you don't wanna sell immediately,
then there are some longer term things we should be doing in addition to the
shorter term things that be that we should be doing. So what your intention is,
that's the second thing to think about as you determine which drivers you should
focus on. And then number three,
the third thing you should think about is overall,
what is the way that you can have the most impact
on your business for you personally? After
all, this is your business. What will make your life easier?
If you're not planning to sell in the next two or three years and your growth
is good and you're scaling your business and you're happy with your growth,
but there are just some things that are bothering you,
there's some things that you can't handle anymore.
There are just some things that you don't wanna do,
then maybe you should look at those key drivers of enterprise value
and begin to put plans in place to make sure those
are handled with or without you so that you can step away from them
and you can have a positive impact on your wellbeing.
So those are the three areas. What are your intentions for the business?
What's the biggest vulnerability? What's keeping you up at night?
And what would you like to have fixed so that
you can step away from it in your business?
And we can put it on autopilot so it can run with your oversight,
but without you involved in the day to day. Nicole,
you have anything to add before we close out?
I would like to emphasize something that's really critical to what we do in Exit
Success Lab associated with these 10 key drivers,
which is that we want to start looking at this with business owners as early as
possible.
We're not talking about just when you're upon an exit or you're just a couple
years out. Yes, we can add value there, but that's often the the last,
the last stop that you can last exit.
You can take off the expressway to start adding some value.
We wanted to start at the beginning. We wanna start at the beginning. Why?
Because that helps us drive value over the lifetime of the business leading up
to that point. That's really where you can maximize value. It us,
the time to assess all of these 10 areas.
Make sure that business is in top shape so that it achieves its highest value,
achieves its highest multiple, and you have more options when you exit.
So that's really important for us,
is having that longer timeframe because that's really where we can make much
more of a difference for our business.
So it's thinking about it now and we don't,
we don't think about exit strategy or exit planning as already putting that that
plan in place, you know, for a short timeline.
It's putting it in place for the longevity of the business so that eventually
when there is a change and there will be changes inevitable that you're prepared
for it and you're at a great place when it happens.
All right, that'll do it for this episode of The Inside Via Show.
I'm Dave Lorenzo, the godfather of growth, and she is.
Nikki G.
We'll see you back here again next week for another edition of our show.
Until then, here's hoping you make a great living and live a great life.