Why You Need An Exit and Entry Strategy (385)

Mike Malatesta  00:00

Hey everybody, it’s Mike and welcome back to the how’d it happen podcast. This is the solo series. So today I’m going to be talking to you about selling a business and more specifically, why you need both an exit strategy and what I’m calling an entry strategy as well. So I’m a believer, if you are a business owner, you’re an entrepreneur, I am a believer in the notion that you should always be operating your business as if it were for sale, I believe that for a couple of reasons. One, it’s very, very easy to be operating your business and lose track or lose focus about what’s important, what are the what are the most meaningful drivers for the business. And when you do that, the business can kind of veer off into directions that you may not desire them to have moved into. But because you’re not looking at it, with an eye towards selling the business, you can drift. And alternatively, when you do run your business, like it is for sale, even if you have no desire to earn and are not considering selling the business, it creates a focus and a dynamic inside of the business for you and for your whole team that I think is really healthy. Because really your job as a business owner, your job as an entrepreneur, your job, your job as the CEO, is to maximize the value of that company at all times. Meaning that you are always looking to make it as good as it can possibly be at the moment and then looking to grow the value of what it could possibly be over time. So I’m a believer in that. So that that’s that part. Now, when you go to sell a business, there is a lot of there a lot of resources, there’s a lot of expertise, there’s a lot of discussion about how to exit a business, and I never really liked the word exit because it sort of has this implication that you’re you know, sort of out the door. And for some people that is how they’re thinking is that the exit is you know, the end the out the door. So there’s a lot of resources about the exit. And again, a little bit of a little bit of my recommendations here the best best way to exit a business, the best way is to have clean financials have a competent team have growing profits and have repeatable systems and processes. For example, those are like four or five things that you definitely should be having, you should definitely be looking at those every day, like you’re going to sell the business but when you do go to sell the business those have to be those have to be solid, they they have to be they have to be tight, and there’s a lot of people that can help you with those. Your I mean, if you’ve got a CFO, for example, or an operations personally in your business, they can certainly help get those tight, document them make sure that those are all being maximized inside of the business. And then of course you have outside resources like lawyer and your accountant and and your advisor when you go to sell a business, there’s lots people who will help you position package, get your business ready to be sold for the best value that it can be sold at which after all is one of the reasons why you’ve started the business and have run it and grown it is because you want it to create value for you just like any other asset that you have. So there’s there’s plenty of people who are there to help you on the exit. And I would recommend if you are considering selling a business, give yourself time, put those things in place, talk to the right people, the advisors, the lawyers, accountants, I will caveat that and I will just say that, from my experience, if you are looking to sell your business, I would, I would recommend that you think hard about having your lawyer or your accountant, either place a value on the business or do the negotiating for you. I just don’t think that’s a great idea. Because most of them, that’s just not their skill set where an advisor, an investment banker, that’s their skill set. But anyway, that aside, those people are there to give you great planning, here’s the planning that often doesn’t get done that I think really needs to get done. And that’s the planning for you. And that’s what I call the entry planning, the planning for a new world that is going to happen when you sell your business and it’s no longer going to include your business and things who are going to change, relationships are going to change. So for example, you know, the relationship you have with the people you work with are going to change the relationship you have with your spouse or significant other could very well change relationships with vendors that you had are going to change. Now there’s a lot of things that come with relationships that have to do with your role in the business that will definitely change. Second thing that could change is importance go from being a person that other people think are very important to perhaps a person that isn’t quite as important to those people or to anyone else and sometimes that’s like a little blow to the ego but it happens and you need to be prepared for it purpose. Your Business gives you a lot of purpose right But even if you don’t like what you’re doing there, you still have purpose. Because it depends on you. And because it’s important to you, and because it is you. And when it’s no longer yours, it can be a real struggle to understand what your purpose is, and a lot similar to purposes goals, you know, you have goals for your business, those are integrated into you, because you are you identify as the business often. And once that’s gone, you may not really have any strong goals, and a lot of people just think, well, at least this is in my experience well, and I’ve sold to businesses myself, so I’m standing in the shoes of you who I’m talking to right now. I’ll win. As long as I have enough money, I’ll figure everything else out. Or you say, Well, I’ve been I’ve been wanting to play golf, and I’ve been wanting to travel, and I’ve been wanting to do this, and I want to do that. I think all that’s great thinking, but that thinking alone is not going to be enough. In my experience, it’s just not going to be enough. You really, really, really need to be spending a lot of time before you sell a business thinking about what your entry strategy is going to be what that strategy is, or your life host business. Because I’ll tell you, money is great. I love money, I’m sure you love money, the more money the better. You know, it’s sure it’s great. But money doesn’t doesn’t come with meaning your business often gives you a lot of meaning. And when you don’t have the business anymore, sometimes it’s hard to have meaning. And I will tell you that that’s not the place that you want to be. So I’ll just close this out by saying selling a business is just it’s like one of the most important things that you are going to do financially, professionally, personally, or your family everything. It’s not just an exit, it’s also an entry. And I want you to I want to ask you this question. Are you ready for that entry? If you are, if you’re not, I can help you I can help you with my podcasts, I can help you with my own experience, I can help you if you’re thinking about how to be ready for not just the exit, but for the entry. And as far as Exit, Exit exits go, there’s another podcast that you might want to listen to. It’s called the deep wealth podcast. Jeffrey Feldberg, is the host of that and he’s got a nine step roadmap for preparing you for to exit your business. He calls it a liquidity event. I really don’t like exit or liquidity. But it those are terms that are used often. So you may want to check out that podcast for the exit. I don’t think he’s going to talk to you about the entry either. And I really do think that you need to spend some time a lot of time working on your entry to this new post sale life as an entrepreneur business owner. Thanks for joining me today for the podcast. I hope you got some value out of it. And I appreciate you investing your time in me and in this podcast. If you like what I’m doing, please share the episode, follow me or subscribe to the podcast depending on your podcast platform. And until next time, maximize your greatness, please and make your future your property something that you are very, very proud. Hey, everybody, thanks for listening to the 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 and Noble Amazon you can get it everywhere if you’re looking for inspiration that will help you unlock your greatness and potential of 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. Number three, my newsletter. 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