Mike’s Mind: The Power of Early Exit Planning (455)

00:00 – Mike Malatesta (Host)
On today’s episode, we’re going to talk about the power of early exit planning for entrepreneurs and business owners, and we’re going to cover three things First of all, why it’s important. Number two, how to do it. And finally, why you should start your exit journey today. I hope you get a lot of value out of this. Thanks for listening. Hey everybody, welcome back to this Friday solo free thinking Friday episode of the how to taping podcast. I’m Mike and I do thank you so much for joining me today.

00:40
For those of you who’ve been listening, you know that I am very, become very interested in helping business owners and entrepreneurs think about and prepare for what I call the dream exit that they deserve, and I want to talk about some of the reasons why, over the next couple of free thinking Fridays, why I think this is so important, why I think there’s a big need for this, and how I believe my unique experiences and skill sets can help people prepare for this really monumentally consequential event in their lives that I’ve seen far too many people successful people not prepare for adequately and, as a result, instead of getting a dream exit the dream exit that I believe they deserve, they get an exit that comes with regret, disappointment, disenchanted, and I’m up with a bunch of other disses that probably apply, and I think that’s completely avoidable and I want to help people to the extent that I can avoid it. So today I’m going to talk to you about our early exit planning for entrepreneurs and business owners, and I believe that a successful entrepreneur or business owners greatest responsibility, their greatest responsibility, is to prepare their business and themselves as early and as intentionally as possible for the dream exit they’ve earned and that they deserve. And this is true even if they’re not ready to sell or think they never will sell. Because there’s a lot of people out there who think one of those two things, both of which are false, because there is going to be some transition in the business, every single business, whether it’s a sale, outright sale, whether it’s a transition to the next generation, there’s going to be a transition and preparing for it is the best way to make it the best transition possible. So, for me and entrepreneurs, dream exit results when two objectives are met First, the business sells for its maximum value and the entrepreneurs continued meaning and purpose is maximized in their post exit life.

03:10
And surprisingly, many entrepreneurs and business owners neglect this crucial aspect of business planning. They launch their ventures with a vision, they have a plan and they have a drive to succeed. But often they overlook the importance of maximizing their business’s potential and value over time. And that oversight can be extremely costly. Because an exit strategy isn’t merely a plan for selling your business. It’s a strategic playbook that guides and entrepreneurs planning and decisions from the outset.

03:48
Operating with this principle in mind significantly enhances your business’s work. It also makes you a better entrepreneur and business owner. Let’s face it when you run your business as if it’s for sale, as if it’s always for sale, you commit and you become intentional about doing the right things the right way all the time. You adopt what I call a buyer’s lens that keeps you looking at and valuing your business the way a potential buyer would. And this intentional exit strategy planning changes the game in a number of ways. One it provides clarity and direction. It aligns operational and personal decisions with long-term goals, influencing your business model, your target market and your growth strategy, among other things. Number two it increases the value of your business. It encourages a focus on building sustainable systems, diversifying your client base and strengthening the brand. All of those things are attractive to potential buyers or successors down the road. Number three it levels the playing field. Buyers are experienced and they often expect to have an advantage over you. Just the way to exit planning levels the playing field and shifts this advantage to you, which, in my mind, is where it should be.

05:16
Over my career, I’ve purchased or been involved in purchasing 25 companies from entrepreneurs and business owners and I can’t remember one that had done any kind of exit planning or had an exit strategy as far as I could tell, certainly not intentional. The serious thought that any of them had about exiting came after me, or my partner first asked them if they would be interested in selling. I’m sure they’ve dreamed about it. All entrepreneurs, all business owners dream about that exit, but they never explored the dream with any serious planning effort and you can guess what happened. In I’d say, every case certainly the vast majority of cases we had the opportunity to define what their dream exit looked like through our buyer’s lens instead of theirs. We had the advantage and we used it to make our dream purchase, not their dream exit come true and ironically, even with the benefit of these experiences in my own back pocket, I left about $4 million on the table of my first exit because my ego told me I know that I knew what I was doing, and I did know what I was doing more than most. But my ego lied to me. It was the buyer who knew better, and I can tell you for sure that there was an indelible lesson learned when that happened, and I don’t want anyone else anyone else to go through something like that.

06:50
They say that you get what you deserve in life, but when it comes to maximizing the value of your business and the value of your life’s work, it’s simply not true. You only get what you deserve when you plan to get what you deserve. This is my belief. You should. You’re an entrepreneur, you’re a business owner, you’ve got something successful going on. You should start your dream exit journey today, not three or five years down the road, even if you want to sell three or five years down the road, because the planning needs to start now, and starting on that journey only requires courage and a few simple, actionable steps.

07:31
Number one you have to develop an exit ready mindset today. So embrace the concept of exit planning as a tool for continuous improvement and value creation and kind of your business. Number two design your business to operate optimally without you. This is one of the biggest things that is a problem for a lot of business owners and a lot of entrepreneurs. They are the tallest building in the organization. They are the dancing bear that sort of has to keep performing to make everything happen. That saps value from your business. So instead, build a confident team and systems that ensure business continuity and increase your business’s value.

08:17
Number three commit to being the best exit ready entrepreneur possible. Make exit readiness a priority and a consistent part of your business strategy. Number four accept that being exit ready is your most important responsibility. Recognize the impact of early, intentional and consistent exit planning on your business’s value. It’s crucial. And number five get help. Find an expert who knows the ropes and can help you start getting you exit ready today with your thinking and your business. Whether that person is me or whether someone else doesn’t matter. I just want you to start getting ready, and getting ready with someone who knows what they’re doing. So if these steps resonate with you, congratulations. Your journey is underway. You’re already experiencing the transformative power of an ex-implanic strategy on you and on your business. And remember the dream exit isn’t just about the destination. It’s about the journey of continuous growth and value creation. So I hope you found some value in this today. Thank you so much for joining me.

09:36
If you are an entrepreneur or you are a successful business owner and you’re thinking about, as you should, what the transition in your business, what the exit, is going to be like at some point in the future, and you realize intellectually that this is the number one job, your number one job is to make sure that your business has continually growing and value and that your meaning as a business owner or as an entrepreneur is also continually growing. And the best way to do that is to start thinking about it. Start asking yourself questions or being asked questions and being able to answer those questions Sounds simple, is simple. So let’s get started. Please do this and you will thank me down the road. As always, I appreciate you listening. Thank you very much. If you haven’t subscribed or followed the podcast, please consider doing that, and until next time.

10:39
Hey everybody, thanks for listening to this show and before you go, I just have three requests for you. One if you like what I’m doing, please consider subscribing or following the podcast on whatever podcast platform you prefer. If you’re really into it, leave me a review, write something nice about me. Give me five stars or whatever you feel is most appropriate. Number two I’ve got a book. It’s called Owner Shift how Getting Selfish Got Me Unstuck. It’s an Amazon bestseller and I’d love for you to read it or listen to it on Audible or wherever else Barnes, noble, amazon you can get it everywhere. If you’re looking for inspiration that will help you unlock your greatness and potential, order or download it today so that you can have your very own copy and, if you get it, please let me know what you think.

11:23
Number three my newsletter. I do a newsletter every Thursday and I talk about things that are interesting to me and or I give more information about the podcast and the podcast guests that I’ve had and the experiences that I’ve had with them. You can sign up for the podcast today at my website, which is my name MikeMalatesta.com. You do that right now. Put in your email address and you’ll get the very next issue. The newsletter is short, thoughtful and designed to inspire, activate and maximize the greatness in you.