Podcast Ep 165 | The top 5 reasons people regret selling their business

There is an entire indus­try and phi­los­o­phy sur­round­ing why you should sell your busi­ness, but it doesn’t need to be that way.

There are many rea­sons why peo­ple choose to sell their busi­ness­es and real­ly the rea­sons can be bro­ken down into two dif­fer­ent things. 

1. Long Term Goal To Exit: A strate­gic deci­sion because their plan all along was to sell their busi­ness and they have some­thing else more desir­able to do with their time (besides golf).

2. Look­ing for an Exit strat­e­gy after los­ing faith. They hit a point of frus­tra­tion or des­per­a­tion and are no longer either enjoy­ing the busi­ness or don’t believe they can get it to the next level. 

The first point is a goal to exit, the sec­ond allows you to think it isn’t going to get any eas­i­er, it might be bet­ter to sell. And there are a lot of peo­ple who will want you to sell. This means you can feel forced to exit.

In this episode we dis­cuss the top 5 rea­sons peo­ple regret sell­ing, and how you can con­sid­er dif­fer­ent per­spec­tives and opportunities.

EPISODE TRAN­SCRIPT

Kevin (00:00:13) — Wel­come to the Growth Whis­pers pod­cast, where every­thing we talk about is build­ing endur­ing great com­pa­nies, com­pa­nies that we’re thrilled to be a part of for years, decades, ide­al­ly even gen­er­a­tions. I’m Kevin Lawrence here in Van­cou­ver, bc along with Brad Giles, my co-host down in Perth, Aus­tralia. Brad, how’s it going today?

Brad (00:00:32) — Excel­lent, excel­lent. And I’ll tell you what, we spent 165 episodes to get to this point where we’re talk­ing about build­ing endear­ing great busi­ness­es through every episode. But this is, this is such an impor­tant episode. This is what it’s about. It is

Kevin (00:00:48) — Guess why peo­ple regret sell­ing. And it’s some­thing that we get very pas­sion­ate about, angry about some­times when peo­ple are look­ing to sell for the wrong rea­sons, which we’ll get into in a minute. So, what’s your word Or f Go ahead, go ahead.

Brad (00:01:02) — Oh, but this is, I know we want to get into it. It’s such, every­thing’s an impor­tant issue, but we see the pain on the oth­er side. All right, so I’ve got that out. I feel a lit­tle bit bet­ter now. Uh, go back to the zen, uh, what’s my word of the day? Coop­er­a­tion. Um, I, I, I feel, I remem­ber, I remem­ber you said some­thing offline once, uh, which is about the func­tion of a coach and a lead­er­ship team togeth­er, and how there, there’s chal­leng­ing and then there’s argu­ing wrapped around that is how are we all coop­er­at­ing to get the same out­come in healthy debate? So cooperation.

Kevin (00:01:53) — Awe­some. Well, the word is, you start­ed talk­ing, I changed mine. My mine is con­flict because, you know, con­flict is real­ly impor­tant to a healthy team, but health con­flict can be done with respect. Yes. And care. And it’s, it’s a dif­fer­ent thing when you make, when you make your point and you start to feel like you’re yelling and scream­ing and threat­en­ing, that’s a whole oth­er thing. And usu­al­ly when peo­ple start yelling and scream­ing and threat­en­ing is cuz they have no oth­er way to com­mu­ni­cate. And they’re kind of, they’ve sur­passed their abil­i­ty to com­mu­ni­cate and their resort to those types of things, which I know I’ve, I’ve been like that before. Yeah. So both, both coop­er­a­tion and con­flict kind of go hand in hand. You got­ta have con­flict some­times to keep that coop­er­a­tion going, but it’s a mat­ter of how good the con­flict is or isn’t. And this kind of drips a bit into what we’re talk­ing about today because sell­ing a busi­ness, you know, and some­times one of the rea­sons we’ll get to peo­ple wan­na sell a busi­ness is, is just, it’s just, there’s too much inter­nal con­flict and too much pain.

Kevin (00:02:52) — But the point though, that we’re look­ing at here today, and this is our, our deep pas­sion and you know, as we’ve talked about, there’s a whole indus­try and lots of peo­ple believ­ing that sell­ing your busi­ness is the ulti­mate goal. And the truth is, for some peo­ple it is. But there’s oth­ers who don’t real­ly want to sell, but sell almost out of des­per­a­tion or los­ing faith that it’s even pos­si­ble to have a great com­pa­ny and enjoy their job. And what we want to talk about today, that it does­n’t need to be that way for those that real­ly deep down inside don’t want to sell. And, and we’re gonna get into some, some strate­gies that we, or some sit­u­a­tions we’ve seen and some things that actu­al­ly help peo­ple to work their way out of it when they kind of lose faith. And, you know, we real­ly break this down into to two dif­fer­ent things is one is some­times peo­ple have a long-term goal to exit. We’re not talk­ing about that. There are peo­ple who, that is their goal from the begin­ning to build it, get it to a cer­tain point, and sell it, and then go do their next thing. The one we’re talk­ing about is that peo­ple end up look­ing for an exit strat­e­gy part­way through cause it’s not going so well. Yeah. I dun­no if Brad, if you wan­na add any­thing into that, oh, between those two philosophies

Brad (00:04:06) — So much, I get 17 hours to drib­ble on about this stuff. But I’m gonna start with, many peo­ple say, what’s your exit strat­e­gy? That should be the cor­ner­stone or the begin­ning of a busi­ness plan poten­tial­ly, but I

Kevin (00:04:23) — Guess all time I hate it. I hate it,

Brad (00:04:25) — But, but why? Wh where is the, we’re chal­leng­ing the ortho­doxy around that we’re chal­leng­ing. Well, why, why does it need, I just

Kevin (00:04:36) — Thought of some­thing. I just thought of some­thing. It’s like when you’re get­ting mar­ried, some­one’s say­ing, Hey, so what’s your exit strat­e­gy? Like when we get mar­ried, we don’t have an exit strat­e­gy. Why, why would­n’t you start build­ing a com­pa­ny that peo­ple tell you you need to have an exit strategy?

Brad (00:04:53) — And this is because we see this stuff day in, day out. We see the pain and the, and the, the toll that this kind of stuff takes. So what we’re say­ing is that it does­n’t, you don’t need to think about it like this. And I want to tell you how, where was the first point where I began to think dif­fer­ent­ly about this? And it must have been 15, 17 years ago. There’s a guy called Tom runs a paint­ing busi­ness right now, you might think painter, not sophis­ti­cat­ed, prob­a­bly a ter­ri­ble busi­ness mod­el. But this guy was the com­plete oppo­site. Even on reflec­tion, the strat­e­gy, the exe­cu­tion, the every­thing. It was bril­liant. Right?

Brad (00:05:35) — Now, Tom said to me, he said that the, he’s seen so many peo­ple, a bit of an aged fel­la, but he’s seen so many peo­ple who have been run­ning their busi­ness. He said there’s two types of peo­ple. There’s the, the ones who get in and then they try some­thing, um, and then they sell that busi­ness and they, they start anoth­er one and then they, they get fed up or they sell that to make a dime. And then they, so they’re always kind of switch­ing around a bit like the fox and the hedge­hog, right? They’re always, he said, but these peo­ple were nev­er suc­cess­ful. They get to their fifties, six­ties and they’re like, I was always wait­ing for that big deal. I was always wait­ing for some­thing that would scale. Right? He said, but the ones that are tru­ly suc­cess­ful are the ones who get to their fifties and six­ties and they’ve stuck at it and they’ve got­ten bet­ter and bet­ter and bet­ter and bet­ter and focused. And they’ve nailed it over time. He said, you, you, he said, there are these two peo­ple and if you wan­na win, you’ve got­ta be the lat­ter. And I’d nev­er thought about it like that as a young, as a young entre­pre­neur who was full of beans. But that’s where my, the first change in my mind­set began.

Kevin (00:06:52) — Inter­est­ing. So what we’re gonna dig into is we got kind of like five core things of why peo­ple end up sell­ing their busi­ness­es almost under a bit of inter­nal duress, high­er degree of poten­tial­ly regret­ting it. And the root of it is gen­er­al­ly in life we’re more like­ly to regret deci­sions when we are fear-based and run­ning away from some­thing ver­sus when we’re oppor­tu­ni­ty-based and run­ning towards some­thing. And, you know, we got five things I’ll out­line to five and then we’ll dig into ​‘em. But part­ner or share­hold­er issues, they can’t see a way through. So exit­ing seems to be a solu­tion. They don’t believe them­selves as the founder or the leader that they have the skills or some­times ener­gy to get to the next lev­el. Fed up with peo­ple want­i­ng to build or need­ing some per­son­al wealth or need­ing, want­i­ng some per­son­al cash or wealth, uh, out­side of the business.

Kevin (00:07:43) — And then just basi­cal­ly not enjoy­ing it. Like they don’t like their job and they’re not enjoy­ing their job. So we’ll dig into those. And I’ll start off with a sto­ry from, um, uh, actu­al­ly it’s in the front of my book so I can talk about open­ly. A guy named Nigel and he almost sold his busi­ness because of part­ner frus­tra­tions. His part­ner and him did not get along. And also he was kind of tired of run­ning the show and he could­n’t have have, have a good pres­i­dent and he had a deal and it fell apart, which is fun­ny. End of the day he end­ed up find­ing a way to bioTE part­ner and he bought his part­ner out and he got some­body in his team. The third try, he got a great pres­i­dent in place. It’s got­ta have been 10, 12 years ago that that all hap­pened. The com­pa­ny’s doing well. Nigel is able to keep his strate­gic role a, a a as the major­i­ty share­hold­er. His pres­i­dent is also a share­hold­er too. Um, and and able to do all the cool stuff he wants in his life. He’s got his cake and he’s eat­en it too. And it could­n’t be bet­ter. So he found a way through and thank­ful­ly the trans­ac­tion did­n’t happen,

Brad (00:08:53) — Thank­ful­ly. Um, so part­ner­ship. Mm. A part­ner­ship is the only ship that’s built to sync. Okay? No one builds a ship with a plan to sink. But, but the struc­tur­al nature of part­ner­ships means that when we go in, we’re all excit­ed. We’re all, uh, look­ing for­ward to the future, and we have a com­mon ene­my. Okay? The com­mon ene­my is the growth of the busi­ness to estab­lish and build some­thing. Okay? But then over time, all of the lit­tle bits and pieces mean that the com­mon ene­my either isn’t there because we’ve built the busi­ness or there becomes lit­tle points of con­flict that either way over time. Uh, I remem­ber there was one Syd­ney team who had a part­ner con­flict. Uh, when they had noth­ing, it was fan­tas­tic because they were all gonna go and do the work and get stuck in, but then this con­flict became mas­sive and I had to try to work through with them that con­flict so they could build an agree­ment doc­u­ment after the fact because they were think­ing, I’m just gonna exit. It’s no good. And this busi­ness has poten­tial to be in like 10, 20, 30 coun­tries. This is an amaz­ing busi­ness. And they were like, yeah, it could change their whole lives and their grand­chil­dren’s lives kind of thing, right?

Brad (00:10:09) — So we, we start­ed again, we built the uh, uh, part­ner­ship agree­ment doc­u­ment, and then we went for­ward. Um, anoth­er exam­ple, we had a minor share­hold­er owned, I dun­no, 20, 25% of the busi­ness. And they kept com­ing in and telling every­one to do, the team hat­ed it, okay? Because this per­son was total­ly destruc­tive. Uh, or, and, and dis­rup­tive those issues eat away at the ener­gy of the founder and the leader for sure. All of those issues. And they’re like, you know what, it’d be eas­i­er to do some­thing else.

Kevin (00:10:46) — Yeah. And we’ve had a few sit­u­a­tions. The hard part is actu­al­ly a lawyer from of mine says, look, one of the biggest, a big, a big prof­itable area for law firms is part­ner­ship agree­ments. He says, the fun­ny thing is though, you can rarely get them signed, peo­ple have a hell of a time agree­ing on it’s hard, espe­cial­ly when you’re already run­ning the busi­ness. So, you know, I’ve got­ten a A C E O that was hav­ing part­ner­ship issues and they, they just, and because they did­n’t have full con­trol of the com­pa­ny, it was a night­mare and it was real­ly cre­at­ing a lot of stress and affect­ing their health. Long sto­ry short, they found a guy who’s a mas­ter facil­i­ta­tor of part­ner­ship agree­ments, not a lawyer who is able to bridge agree­ments and find cre­ative ways to take thing care of things so the part­ners can get back on the same page and move forward.

Kevin (00:11:38) — And some­times it might require buy­ing one out or dif­fer­ent shares that they would get so they’re no longer vot­ing and oth­er things, but they have. And so I, now, I have a guy that in that I, uh, know as a resource for my clients that if they have issues that there’s always a way through it, but often the CEO e o can’t deal with it. So mm-hmm. To kin­da wrap, so basi­cal­ly part­ner­ship share­hold­er issues, there’s, there’s, there’s always ways. One of the way, uh, chap­ter 12 in my book, there’s a thing called tack­ling Tough con­ver­sa­tions. And some­times you just need to have a tough con­ver­sa­tion or some­times you need a mag­ic man like this guy that I know who is able to go into these tense way sit­u­a­tions and talk to peo­ple almost like a medi­a­tor and, and find a way through. But there’s, there’s almost always, it’s just a lit­tle hard­er than we think. Well, let’s, let’s jump onto the sec­ond one. Mm. The founder, not basi­cal­ly they lose faith in them­selves. I mean, they are get­ting beat up on a reg­u­lar basis and they don’t believe that they can get it to the next level.

Brad (00:12:38) — Mm. So this is the, this is the sto­ry that peo­ple tell them­selves that founder-led com­pa­nies can’t scale. Yeah.

Kevin (00:12:47) — Yeah.

Brad (00:12:48) — And it’s a sto­ry because it’s, it’s made up, right? Mm-hmm. , they can total­ly scale. Uh, now some peo­ple maybe be not in some cir­cum­stances there’s always excep­tions to the rule, but you don’t need to sell because you can’t take the busi­ness to the next lev­el. Okay? The objec­tive is free­dom at a per­son­al lev­el and at a finan­cial lev­el for start­ing and run­ning and scal­ing a busi­ness. So keep­ing that goal in mind, we then come back to, well, who are the peo­ple that we need to put into what places? Mm-hmm. , anoth­er way to think about it is there’s a, a, a state­ment which is you need to sur­round your­self with peo­ple who are smarter than you mm-hmm. . So if, if, if you don’t have the smarts when it comes to oper­a­tions or mar­ket­ing or the way the machines plug togeth­er or what­ev­er it is, then you’ve got­ta find peo­ple who can be excep­tion­al at that. And then your job Yeah. Becomes to scale.

Kevin (00:13:51) — And the thing is, where, where, where there is truth about many founders can’t scale com­pa­nies. It’s absolute­ly true. It’s just cuz they won’t learn like they get in their own way. So if you’re hu hum­ble and dri­ven, you can do almost any­thing. But you need to learn, you need to sur­round your­self with bet­ter peo­ple. You need to make tough deci­sions and do a bunch of things. But if your ego’s in the way or if you just can’t find a way to work well with peo­ple, well then maybe that’s dif­fer­ent. So let’s,

Brad (00:14:21) — Let’s just, let me just inter­ject there. That could lead to all of these things. Could lead to, so what you’re say­ing, if we were in a coach­ing role, so you’re gonna exit the busi­ness when it’s got a 6 mil­lion val­u­a­tion com­pared to when it’s got a 67 mil­lion val­u­a­tion. Yeah.

Kevin (00:14:36) — If, or a 670 because you’re not will­ing to learn

Brad (00:14:40) — Because you’re not will­ing to learn get well,

Kevin (00:14:42) — Get to work. Like most of the most effec­tive CEOs that we do that work with the build­ing dur­ing great com­pa­nies, the ones that cross a hun­dred mil­lion, 250 mil­lion, 500 mil­lion, a bil­lion, what­ev­er it is, they are vora­cious read­ers and not con­stant learn­ers cuz they want to get to the next lev­el. But you got­ta go learn what it’s like to be, and we’re required at the next lev­el. And if you don’t, most peo­ple won’t nat­u­ral­ly get there. So, you know, I I got a c e O that, and the com­pa­ny was just under a bil­lion when, um, I start­ed work­ing with this one. And it, it was to the point where they were like, I don’t, I, I can’t see it. I don’t, I don’t think I want to do it. But when I went in and looked at the oper­at­ing sys­tem of the com­pa­ny, like how the c e o was doing their job,

Brad (00:15:28) — Yeah,

Kevin (00:15:29) — Of course, of course they were smart and capa­ble. But we had to do a whole almost what I would call like, like a, like a reset of the, I call it a boil down. We had to boil down all, there was so much com­pli­cat­ed junk in the sys­tem. Yeah.

Kevin (00:15:47) — And, and it was­n’t even clear what the most impor­tant stuff was. It was noisy and messy. So we had to go and re-clar­i­fy the CEO’s goals and what the c e o want­ed out of this machine. Then we had to go through and fix strat­e­gy, fix peo­ple, and then fix the finan­cial report­ing and returns part of the busi­ness. Like all of it, because it was just through the growth, it got messy and good. Good. C e o just need­ed to real­ly do Yeah. Just to clean it up. And then all of a sud­den they’re like, wow, I got an awe­some new team strat­e­gy is real­ly clear, the finan­cial report­ing, we know what we got­ta do and what we need to focus on. It’s like they’re thrilled. It’s just like they, it’s like the back­yard had over­grown and become a jun­gle and we went in and groomed it and had them get set up with an oper­at­ing sys­tem to get the gar­den­er and the arborist and all the stuff to con­tin­ue to take care of the property.

Brad (00:16:41) — Yeah. Yeah. So you don’t have the skills or ener­gy hire peo­ple who can do it or learn and do the hard things because the return is worth so much more. Like there is, there is no rea­son you can’t turn your busi­ness into a busi­ness that you love, that gives you ener­gy. That’s the objec­tive. Sure. You might not be able to do it by next week, but there’s no rea­son that you can’t. So let’s move to num­ber three.

Kevin (00:17:07) — Unless, unless your busi­ness, unless your busi­ness mod­el flawed. So, so, but on, on two, so from, from, um, again, my, your oxy­gen mask first is writ­ten with this in mind. So chap­ter eight, learn like your life Depends on It is key to, you know, not hav­ing the skills and build­ing the skills. And two, is that Chap­ter 11 quadru­ple your iq. It’s who you sur­round your­self with. Get way bet­ter peo­ple around you. Nor­mal­ly when peo­ple like that, they don’t, they’re not sur­round­ed by awe­some­ness in every direc­tion. Go ahead Brad. Num­ber three,

Brad (00:17:36) — The Yep. Third one fed up with the peo­ple issues I was asked today by a founder, c e o when you’re coach­ing peo­ple, is every sin­gle con­ver­sa­tion about peo­ple issues

Kevin (00:17:51) — ?

Brad (00:17:53) — Um, maybe not every sin­gle one, but cer­tain­ly we talk about peo­ple issues reg­u­lar­ly. Uh, so we’ve seen the tax that this has on lead­ers. It’s hor­ren­dous. Yep. Okay. And once you see behind the cur­tain of build­ing a great tame of a play­ers, once you under­stand it, you can’t unsee it. And then it only com­pounds the frus­tra­tions you have when you don’t have the right peo­ple on the bus doing the right things the right way. See, build­ing a great team of A play­ers is the job of the c e o leader. Like, that’s it. You’ve got­ta sur­round your­self with the best peo­ple smarter than your­self, as we said before. So there’s one leader, and for many years, uh, had sev­er­al mediocre peo­ple. And you, he used to always say to me, look, uh, I can’t bring in the best peo­ple if, if, or I can’t build the busi­ness and build a great team if I’ve just got peo­ple always going out the back door depart­ing the busi­ness. We focused on it, we built score­cards and we got a play­ers in. And now that busi­ness is absolute­ly crank­ing. You look to every sin­gle cor­ner of the busi­ness and it’s just crank­ing and com­pound­ing and compounding.

Kevin (00:19:14) — And we see that sto­ry again and again and again, Brad, is that gen­er­al­ly peo­ple tol­er­ate peo­ple that aren’t thriv­ing in their roles. And of course, who wants to, who wants to run a com­pa­ny when you don’t love all the peo­ple you work with? And I had one c e o that, um, that, that we had a con­ver­sa­tion with and real­ly good guy and his team was dri­ving him crazy and he just says, I just don’t wan­na deal with it. Think I’m ready to sell. Went to mar­ket. The val­u­a­tions weren’t good enough. The busi­ness was at a bit of an awk­ward stage. And then final­ly he goes, okay, based on all the feed­back from the pri­vate equi­ty firms he talked to, they all said the same things about what he need­ed to fix in his busi­ness. And he goes, well, the real­i­ty is I want to get it to the next level.

Kevin (00:19:57) — I want a bet­ter val­ue than I could get now. So now I’m gonna go and do the hard work and go and fix the peo­ple things. And there was half a dozen peo­ple that need­ed to be exit­ed, need­ed to change the struc­ture a lit­tle bit. So now he’s gonna go and do the work. And I said to him, just, just be pre­pared, , that you actu­al­ly might not want to sell it after you do it. You were hat­ing your busi­ness because you did­n’t have the right peo­ple doing the right things and it was push­ing up a lot of headache to you so you get the right peo­ple in place. So this is a huge apart, it’s 90 some­thing per­cent of our con­ver­sa­tions and it’s the game chang­er. And most peo­ple tol­er­ate too much with peo­ple in our world. It’s an A to stay. We want peo­ple who are thriv­ing in their roles today, not five years ago, not in five years. Today we need great­ness. So again, and oxy­gen mask first chap­ter 10, make your­self Use­less, one of my favorite chap­ters. Right. Sur­round your­self with so peo­ple, peo­ple so good that you don’t have to do a lot. And then chap­ter 12, stop being chief Prob­lem Solver. Stop telling peo­ple the answers to their ques­tions. Get peo­ple to solve their own prob­lems or get peo­ple that can solve their own prob­lems. So you’re freed up to actu­al­ly do the CEO’s or the founder’s job.

Brad (00:21:09) — We see that so often. Uh, I, for, for the peo­ple who did­n’t see the video, I was crack­ing up when you were say­ing that. Uh, because so often peo­ple, all of these five things, they build up and they’re like, no, I just want out. I just want to eas­i­er life. I just wan­na do it. And then they real­ize the val­u­a­tion of the busi­ness or what their look life looks like after­wards. And then they end up com­ing back to they, they go kind of go through this whole emo­tion­al phase. If they don’t exit, then they say, well actu­al­ly this is just the busi­ness that I want. And then they build the busi­ness that they want from that Yep. Real­iza­tion, right? So, or

Kevin (00:21:49) — They do exit and then they get bored after a while and then they go and build anoth­er com­pa­ny, which is the busi­ness that they

Brad (00:21:55) — Want off. Yeah. Off.

Kevin (00:21:57) — And espe­cial­ly if they’re still in their for­ties or fifties. Yeah. What

Brad (00:22:00) — We’re kind of say­ing here is, you don’t, or wis­dom comes from learn­ing from oth­er peo­ple’s mis­takes. You do not need to go through this pain your­self. All right, so mov­ing on to the next one. That one was, again, so num­ber one, part­ner, share­hold­er issues. Num­ber two, founder not believ­ing they have the skills or ener­gy to take it to the next lev­el. Num­ber three, that one was fed up with the peo­ple issues. And then this one’s inter­est­ing. Num­ber four, want­i­ng to build some per­son­al wealth, per­son­al wealth or secu­ri­ty. They’ve invest­ed every­thing back into the busi­ness or a good deal and they’re like, look, I just wan­na take some mon­ey off the table, or I just, I don’t expe­ri­ence the wealth that I want.

Kevin (00:22:43) — Why is this? Yeah. And the idea. Yeah. And, and, and, and the real­i­ty is peo­ple only only need so much mon­ey, but if you’re, if, if a busi­ness is gen­er­at­ing, I’m mak­ing up num­bers, you know, 5 mil­lion bucks a year of prof­it, whether it’s 500,000, 5 mil­lion or 50 mil­lion, what­ev­er the num­ber, you know, the real­i­ty is one of the CEOs want­ed to sell. And I said, fine, I, I can under­stand how you want to take some of your, your net worth out of your, your com­pa­ny and put it some­where else. And we went through a bunch of dif­fer­ent sce­nar­ios. And one, because basi­cal­ly you just think like a pri­vate equi­ty firm would, what are they gonna do? Well, they’re going to e lever­age the bal­ance, bor­row a bunch of mon­ey and use, you know, the bank’s cap­i­tal and investors cap­i­tal, but use the bank’s cap­i­tal and get the busi­ness to pay that off while it con­tin­ues to grow.

Kevin (00:23:30) — So I said, you real­ly got options. You can go bor­row mon­ey against your own com­pa­ny and pull it off and put it in a hold­ing com­pa­ny and do it that way. Or just focus on improv­ing your cash in the busi­ness as it’s grow­ing so that the com­pa­ny can afford to gen­er­ate more addi­tion­al cash. And of your 5 mil­lion, depend­ing on the busi­ness mod­el, maybe you could pull out, so if you did the lump sum bor­rowed some mon­ey, you could prob­a­bly take, you know, 20, 30 mil­lion out of the com­pa­ny if you real­ly want­ed to, espe­cial­ly if went back when rates were good, or of the 5 mil­lion of prof­its depend­ing on the cap­i­tal require­ments. Um, maybe you could start to pull out two, 3 mil­lion extra a year and, and trans­fer that to a hold­ing com­pa­ny. And over, um, a num­ber of years, you could end up in a, in a quite a great posi­tion, but you have to take the time to think the strat­e­gy through, and you could sell it and get all the mon­ey today, which is the alter­na­tive. But there’s, there’s ways to do it. And a lot of peo­ple, um, see the lump sum exit as, as the mag­i­cal solu­tion when there’s oth­er ways. And if you plan in advance, you can just do it over time.

Brad (00:24:38) — How much do you want? That’s the first thing that comes to mind. Mm-hmm. . Um, and what is the itch that you’re try­ing to scratch? Because if you wan­na build some per­son­al wealth, how much do you want? Do you want it because you wan­na buy a boat or a plane, or you wan­na buy an invest­ment prop­er­ty or you wan­na buy a farm? What, what’s on your mind? You wan­na invest in oth­er com­pa­nies because u under­stand­ing why you have that desire can lead to, well, once you buy a plane, what does that mean? You need to run it, you need the oper­at­ing cost or what­ev­er that might be. But when you know what it is, then you can say, okay, well what do we need to do to the busi­ness to extract that amount? And over what peri­od of time?

Kevin (00:25:21) — Yes.

Brad (00:25:22) — A sale might be, let’s say a three x mul­ti­ple. Now if you’re in soft­ware, you’d be laugh­ing because you’d be doing a 10 x rev­enue rather than, uh, three

Kevin (00:25:29) — X or 20 it’s, or 20 at some point that they were doing. Yes.

Brad (00:25:33) — Yeah, I agree. But, uh, uh, the aver­age busi­ness might be doing a three to five times prof­it mul­ti­ple to get the

Kevin (00:25:40) — Well small ones, the big­ger ones, big­ger busi­ness­es get, like some of the big­ger ones have been, you know, 10, 12, 14 times prof­it Per­fect on the big ones, but the Yeah, just a clear Yeah.

Brad (00:25:51) — Yeah. But the point is still how much do you want? And then what do we need to do to the busi­ness to make that hap­pen? Because if your busi­ness is spin­ning out cash, that’s what you want. You want a busi­ness that spits out cash rather than sucks cash. And if

Kevin (00:26:09) — It does­n’t, you need to go fix it

Brad (00:26:11) — And you need to go fix it Exact­ly. If it does. But, but a busi­ness that you own should be one of the best invest­ments that you make that should Yes. Gen­er­ate some of the high­est returns, cash returns that you see if it’s run well. And that’s what we’re say­ing. So there was an exam­ple. Yes, I had a pro­fes­sion­al ser­vices firm, uh, and the c e o was talk­ing to me and she was say­ing, look, I just want out. We’re just get­ting, you know, I’m just tired of it. It’s, it’s not cre­at­ing the results. And I think she even said, I’d be bet­ter off going and work­ing for some­one else. Um, and so yeah, from that we, we worked to imple­ment the busi­ness, uh, and we fol­lowed through. Now they’re at 30% prof­it grow­ing at 30 to 40% a year. And she’s total­ly delight­ed that I, um, helped her through that, that situation.

Kevin (00:27:01) — So in both of those sce­nar­ios, whether it’s pulling more per­son­al cash for a rea­son or change in fix­ing your busi­ness, so it gen­er­ates sub­stan­tial cash that both requires strat­e­gy and some big brains to, well, some­times sim­ple brains to help you fig­ure it out. So let’s go to num­ber five, and this is the most impor­tant. I got a quote behind me, um, uh, in the red about this, but it’s about enjoy­ing the ride. And a lot of peo­ple don’t enjoy it. And that’s real­ly unfor­tu­nate. And so there’s a chap­ter in, um, your oxy­gen mask first called Invest in Your Sweet Spots, which is basi­cal­ly do the work that you love and that that gives you ener­gy. Uh, and you men­tioned some­thing about this a lit­tle bit ear­li­er, Brad, and then also do it in the way you like to do it or the envi­ron­ment you like to do it, but basi­cal­ly engi­neer your job.

Kevin (00:27:50) — So you love it. You’ve got con­trol and you can struc­ture the com­pa­ny to cus­tom suit you. And a lot of part, a lot of times, this is when a CEO’s been doing it for a long time and they’re just tired of the oper­a­tional part of the role and the bor­ing basics. And tru­ly, it’s, it’s often time, and I see, espe­cial­ly as peo­ple get late for­ties into their fifties and they’ve been doing it for a while, where there’s often the c e o and pres­i­dent role are kind of com­bined. I’m, I’m hold­ing with my hands, kind of hold­ing ​‘em above and below each oth­er like two cups. And gen­er­al­ly the true strate­gic cce, the true c e o role is very strate­gic. And the pres­i­dent part of that role is more oper­a­tional. So it’s often the split­ting of those roles or chang­ing of the org structure.

Kevin (00:28:33) — So the c e only only has a few direct reports, so the CEO o can stay strate­gic and not stuck in the oper­a­tions. And right now I got prob­a­bly four of my CEOs going through this tran­si­tion. Mm-hmm. get­ting them­selves to tru­ly be what I call the cap­i­tal C C E O or a strate­gic c e o, where they are not real­ly involved in oper­a­tions at all. They’re freed up to be strate­gic and work­ing far into the future of the busi­ness and where they’re work­ing out, you know, ide­al­ly it’s like three years plus, of course there’s a bit of oper­a­tional stuff they have to stay on it, but they can use their under­stand­ing of the busi­ness to pro­vide real­ly good input and flag step oper­a­tional­ly, but it’s not flow­ing up to them. And they can stay in strate­gic mind, uh, stay in their strate­gic mind way more often. And after 10, 20, 30 years of doing it, most peo­ple are more than ready for it. And, and some­times wait a lit­tle bit too long to make that change.

Brad (00:29:32) — The, the cost of engage­ment or not hav­ing a high­ly engaged founder own­er, c e o can be much high­er than we might antic­i­pate. And so it could be the time to appoint a pres­i­dent or c o o or a C E O, and then the founder will take on a more strate­gic or a board posi­tion or what­ev­er. Um, but that cost is so high. So what gives you ener­gy and what drains your ener­gy in your role, uh, run to lists and then try to focus on the things that give you ener­gy. And I love what you said, again, I was gonna reit­er­ate it, but you did three years into the future is where you should be spend­ing most of your head time in a mature busi­ness. Um, yes. And there was a, a quick sto­ry, but we had one CEO we were work­ing with, and they built a plan around that to main­tain their, their engage­ment in the busi­ness, know­ing that they were feel­ing a bit stale and dry, and now they do what gives them ener­gy. And that’s kind of what matters.

Kevin (00:30:41) — Awe­some. So a cou­ple in, in your oxy­gen mask first chap­ter four, invest in your Sweet Spots. I men­tioned chap­ter 16. Keep going for it. Keep­ing your­self stretched per­son­al­ly so you also stay inspired. And then the final chap­ter, chap­ter 17, plan, plan, plan. Again, go back to your per­son­al Strat plan, what do you want, what do you not want? And then take that to help you re-engi­neer your role. So we’ve cov­ered off five prin­ci­ple, five rea­sons peo­ple sell when they don’t real­ly want to. And remem­ber, some peo­ple their goal is to sell from day one. Awe­some. That’s your deal, that’s your gig. And a num­ber of our clients have done that, and that’s our strat­e­gy and it works well. We’re talk­ing about the ones who reluc­tant­ly sell out of frus­tra­tion and pain. So it’s whether it’s a share­hold­er issue, los­ing faith in your abil­i­ty to take it to the next lev­el, fed up with peo­ple, uh, need­ing some cash out of the busi­ness for your own per­son­al wealth or use, or just gen­er­al­ly not lik­ing your spe­cif­ic role in how you spend your time. And so keep those in mind and know that there’s, there’s a say­ing where there’s a will, there’s a way. So if you don’t want to, then you just got­ta look out for the right resources and tools and help and peo­ple like our­selves that help peo­ple build the busi­ness they want.

Brad (00:31:54) — Mm mm That is true. Some­thing we’re super pas­sion­ate about. So much. So we’ve spent years talk­ing to peo­ple about build­ing endur­ing great busi­ness­es, and that is obvi­ous­ly this pod­cast called The Growth Whis­per­ers . You can find us on YouTube if you just search the Growth Whis­per­ers. If you’d pre­fer to see our smil­ing faces. We great­ly appre­ci­ate you sub­scrib­ing, uh, com­ment­ing, and also you can find us, uh, where you lis­ten to your favorite pod­cast again, uh, the sub­scrip­tion, uh, and the com­ment­ing and the rat­ing is so impor­tant to us. It makes a big deal. If we could ask for any­thing in favor, we would real­ly appre­ci­ate the rat­ings in your pod­cast app. Um, and you can find Kevin, his book is referred to a few times today as your oxy­gen mask. First, his web­site is lawrence​and​co​.com. You’ll find also an inter­est­ing week­ly newslet­ter that he pub­lish­es by myself. Uh, I have two books made to thrive and onboard­ed. You can find me at evo​lu​tion​part​ners​.com​.au and again, a week­ly newslet­ter you may find inter­est­ing. Hope you’ve enjoyed the episode today, and we look for­ward to chat­ting to you again next week. Have a great week.