Mastering the Emotional Side of Exiting Your Business

Kathy (host):

Hello there, and welcome back to another episode of Help My Business Growing, a Podcast where we explore how to grow and build a business that is healthy and sustainable. I’m your host, Kathy Svetina.

Kathy (host):

As a business owner, you know firsthand how much time and energy goes into building a company, and you probably dedicated years of your life to seeing it grow and prosper. But eventually, one time in the future, the time will come when you will want to retire, start something new, or even pass it on to the next generation.

Kathy (host):

So what happens when it’s time to exit your business? Is your business going to be ready? But most importantly, are you going to be emotionally ready to let go something that we don’t really talk about as much when we are talking about exiting the business?

Kathy (host):

And you will see that if once you start exploring this topic, there’s a lot of information out there on how to actually do it in terms of financial valuations, how to find a buyer, where to find them, and all that stuff that goes into the process of exiting the business, but not that much into being emotionally ready to let go of such an important part of your life.

Kathy (host):

And as a quick reminder, all of the episodes on this podcast, including this one, come with timestamps for topics that we discuss, and each one has its own blog post as well. You can find all the links and the detailed topics in this episode’s show notes.

Kathy (host):

Joining me for this podcast is John Ovrom. He is the President and Founder of Exit Consulting Group, which provides consulting and brokerage services for business owners to prepare them for and execute their exit. He’s also the author of “Exit and Answers: Navigate Your Business Exit Like an Expert.” John specializes in creating roadmaps for business owners anticipating a transition, whether they’re transferring the business to family or employees or selling to a third party.

Kathy (host):

Join us!

Kathy (host): 

Welcome to the show, John.

John (guest): 

Thank you. Good morning.

Kathy (host): 

Good morning and Good Afternoon. So, John, as business owners, we spend years and years pouring our hearts and souls into building a company. And there’s so much time and energy that goes into this. But a lot of owners really think about that at some point, this shell and as well as everything else. If I get a little bit philosophical here, but no matter how successful your business is, there will come a time when you’re ready to move on to either explore new opportunities or maybe just ready to retire and not work anymore.

Kathy (host):

You wrote a book called “Navigate Your Business Exit Like an Expert,” and as someone like myself who reads a lot of business books, I was pleasantly surprised by how actionable and holistic it is. There are a lot of books out there that give you the “how-to” of the process of exiting, like the M&A part of it. But they never talk about the personal and emotional side of exiting the business for the owner, which I think is such a huge missing piece, especially in the small business world. Let’s talk about why you included that in the book.

John (guest): 

I’ve been a serial entrepreneur, and I had no idea when I went to sell my company that the personal side was going to be the tough part. I just thought it was gonna be like selling my house, selling a car, selling a business. How hard can it be, right? I mean, people do it. So you call someone, sell it, and it was not. And no one told me that. No one told me how I was going to personally be associated with this business beyond it just being a tangible asset.

John (guest): 

And so now, 18 years later, helping hundreds of business owners, I’ve learned that I’m normal, that I’m a typical business owner who… and that the goal is for people to understand that selling your business is much more than the transaction. And that only became relevant as I saw a pattern. I thought I was just kind of weird. But to be honest, it is really like losing your identity. It’s losing what makes you relevant. Because as a business owner, that’s how I value myself. Tom Brady values himself as a football player. He’s still out there because that’s all he knows, what he’s been doing. This is all I do: run companies. That’s what I love. And you’re not going to get LeBron James walking off a basketball court without him losing his identity. And so business owners have that same feeling, and just no one ever talked about it.

John (guest): 

So that’s why I’m very passionate about making sure business owners understand that it’s about owner readiness more than it is about business readiness.

Kathy (host): 

So when you are going through this process yourself and as your clients go through this process, when do you think it’s the moment that it really hits you, hey, this is going to be a major change? Is it before you basically sign on the dotted line to have someone help you exit the business? Or is it as you’re going through the process? Or is it really when everything is signed, delivered, and sealed, and the money is in your bank account? And then Monday comes, you’re sitting there, and you’re like, “I have no idea what I just did.”

John (guest): 

I would call it hiking the mountain range of the Rockies. Every time you get up to the top, you’re like, “Okay,” and then you see another hill, and you’re like, “Oh, I gotta go up another mountain.” It’s a roller coaster, to be honest, right? Because you have this desire to leave. Sometimes it’s mental, emotional, sometimes it’s physical reasons why you’re leaving, but you think you want to get out.

John (guest):

When you experience that process, then you actually put yourself out on the market. And then you’re kind of nervous and excited because, hey, everyone thinks their kid is beautiful. So I’m gonna put my kid out there on the market. And then, you know, they sit around and go, “Well, maybe they’re not as good of an athlete, and maybe they’re not as smart.” So you kind of get a little humbleness associated with it, but you’re like, “Okay.” Or someone’s excited about it, and then you get excited. But then you have to start thinking about, okay, when you start talking price and terms and taxes, and what am I going to do next? And then you bring lawyers and CPAs, and kind of go through that, and then you fight through all those emotions, like, “Okay, I think I’m ready.” And then the triggering of signing something and saying, “Okay, here we go. We’ve been working together. Are you ready to do this?”

John (guest):

Now, I’ve been married for 35 years now. So I can’t say I know the single market, but it’s very much like, “Hey, you put yourself on the market as a single person. Anybody want to date me? Hey, I’m gonna go out there. And I’ll just date you specifically. So we’re going to be exclusive. Let’s go exclusive just for you. And let’s see if you’ll buy it.”

John (guest):

Alright. I think we’ve gone through it all: school, get married, it’s good at the altar, and you’re sitting at that altar going, my life is about to change. Yeah, so every one of those has hurdles. But I would tell you realistically, as it relates to the exit, it really depends if it’s out of cause or out of convenience. Okay, so when people are exiting for cause, whether it’s they’re sick, their spouse, they’re financially unable to invest in it more, they’re disabled, they’re fried, if they’re looking to get out for a cause, my husband died, the ability to walk away from that is easier than out of convenience, right? If you’re just saying, “Well, I’m turning 65, and I think I’m supposed to get out.” A lot of these things, emotionally, you start to process, and sometimes it’s like, “Well, but this is what I love to do.” But they don’t really know that until they go through the process. It’s just their spouse or their kids saying, “You need to be getting out.”

John (guest):

I mean, I get called by spouses and kids saying, “I need you to get my dad to stop working. Can you help?” Huh? No. Why? Because he thinks that dying at his deathbed while he’s working is the right answer. And I said, “Okay, dying while you’re working, doing what you love is an exit. What’s wrong with the exit? His exit doesn’t have to be what you think an exit should be. And there is no right exit.”

John (guest):

There are five ways that we help people think about their exiting because most people think of an exit as either selling their company and selling their job. In reality, you could sell your company and still stay on as an employee. Or you can quit your job, hire someone in place, and keep the company. Or you can do both. You can sell the company and have a job. Those are all different exits.

John (guest):

And then, inside those, you can liquidate it, you can give it away, you could sell it to your partner or sell it to your key employees, you can give it to your kids, you can quit, hire a CEO, run it in perpetuity, and just leave it for the estate, just returning mailbox money. Or you can stay on until you die. I’m totally okay with that. All we ask is, get life insurance. So when you do die, your widow doesn’t have to take care of it. Your widow or your kids or the state, if you don’t even have a trust. They’re not the ones who have to deal with it.

John (guest):

So if you want to be that business owner who stays at your desk, don’t leave it to your widow or to your kids to deal with. Leave some money set aside so you can hire professionals to do it. That would be my only advice to a business owner who wants their exit plan to be “stay at my desk.” And we have quite a few of those. We call them Viking funerals. Right? They’re the ones who want to go out on the battlefield. And they want to die as the king of the thing and the front with their shields, and everyone’s battling, and they don’t want to die on the field. “I am a Viking.” Oh, great. Do it.

Kathy (host): 

I love that term “Viking funeral” for the business owner, and it is true. When we have discussions about the businesses, the majority of them is: Do you either sell it to another company or to an individual that gets absorbed into their company? Or you just stay on? And you gave a lot of good options where, you know, you can be an employee in the business. You can just basically demote yourself from the CEO owner into an actual person who just does things in the business, and then have that until you get bored of that or you just want to retire completely. Or you could be an advisor and have a CEO run the day-to-day operations, and you’re just overlooking it from a strategic point. And you get compensation that way. I really liked that distinction.

John (guest): 

I think the biggest challenge business owners see is that their business is them. And if there was anything we could give them, any advice, it’s not them, it’s their child. Stop being a helicopter parent, let this business grow and get out of its way. And sometimes, being a good business owner means you step aside and hire a new CEO. Because your best is technology or your best is on the R&D side, or your best is sales. Let somebody else execute because it’s getting too big.

John (guest):

And so many business owners feel like, “No, no, it’s my company,” when the reality of it is, although they are your kids, you don’t own them. Okay, let them grow up, go to high school, go to college, get married, do their own thing. And if you look at your business more as a role, as an opportunity, just because your kids get married doesn’t mean you lose them, it’s just a different life.

John (guest):

So just because you’re not running it day to day, and you don’t have your thumb on everything, and you’re not the man or the woman in charge of the whole place, it’s okay, it’s a company. And if we can get business owners to understand that, because the challenge in exiting is they don’t feel relevant when they leave a company, when they are the company. They have put themselves in a place where they were a solopreneur, and the owner is in the middle, and everybody reports to them. So they consider themselves valuable. And they say they’re doing it for the sake of the company. But in reality, business owners are doing it for themselves because that’s their way of being in control.

John (guest):

So if you can find something that allows the vision concept at the company to be on its own, and you are irrelevant without that business, you can have an exit. But it’s the challenge of separating yourself from your business in order to really achieve your exit.

Kathy (host): 

Yeah, and I see that a lot when I worked a lot with growing businesses. And you can see that transition of when you have to let go and start having the document that processes and get yourself out of the middle. And it’s painful because I like to also think about business, as you said, almost as a child. It is yours. But it’s a completely separate entity. It’s almost like its own person. So even if the business is growing, if you’re always treating it like a baby, it’s really not going to grow much. It’s always going to be dependent on you. And as the baby goes through stages, you have the baby stage, a toddler stage, and you have the teenage stage, which is the rebellious stage, obviously. And then the young adult. Like, at every single stage, its needs things that are different from you. And your employees need things. They’re different in every single stage.

John (guest): 

You know, the kids are younger, they need you, but then they listen to their teachers more than us. And then they listen to your coaches more. And then they get to the phase that they listen to their knucklehead friends more, which is always the worst stage. But then, you know, then they come back to actually thinking you might know something, then they come back to listen to parents again. But part of that phase is the same way as your employees. They need other people besides you. Because you’re not right. I’ve told my client as well as told my employees, just because I own the company doesn’t make me right. It just means I’m an owner. Doesn’t even make me a CEO. I just called myself a CEO because I owned it. That doesn’t mean I’m a CEO. It’s just the title. The reality is that I can be a CEO of a small company, but not a big company. And when you’re thinking about your exit and when you’re growing your company, visualize the concept that this is a child that has its own social security number because it does. It has its own federal ID number that pays its own taxes, and it has its own bank account. It can do everything all by itself. Don’t make it about you. Make it about the business and how can you support that child and find its passions, whether it’s in sports, music, or science, whatever that one is. Find a way to support it and grow it and build it, and then you just get to ride along with it instead of you trying to be the person in it. And then you can actually build it to an exit.

Kathy (host): 

Is there anything else that, as you’re going through this emotionally trying to separate yourself from the business, anything else that has been particularly helpful to you or to the clients that you work with? That’s helped them with this emotional journey and preparing themselves for exiting the business?

John (guest): 

We spent a lot of time just helping people understand that they’re normal, that the feelings that they’re experiencing are normal. That most business owners, particularly G1 founders, have control issues. They have a tendency to want to be in control, and letting go of control is a big deal for them, even if it’s to a kid or even if it’s through a partner.

John (guest): 

Now, if you have a partner, so if you and I are partners, then we’re used to building our company together. Kind of, I lean on you, you lean on me, and I’m a little. So partners have a little better chance of exiting out because they’re more willing. The solopreneur who has been driving everything, that says, “It’s my name on the building, it’s my name on the trucks, I’m the one who did all of this really, really hard.”

John (guest): 

So letting them know that it’s normal, that it is going to be hard, and that you need to find something else to do. And this is my biggest piece of advice: find a hobby outside of business. Don’t let business be all of your friends, all of your hobbies, all of your social events. If that’s all you know, you’re never going to walk away. Find something that is passionate because I am an entrepreneur, I’ve learned that that’s just what drives me every day. That’s okay, I can’t take that out of me. But I can find other things to do in order to fulfill that same itch, to scratch that itch that I have to keep driving.

John (guest): 

So if they can think about business owners that the business is a child and don’t be a helicopter parent, and that they’re not going to be in your life your whole life. And you need to be able to live without your children when they go away. Think about the same way as you can do a business would be by far the biggest things. And then when they’re the ones parent at the fence, crying because their kid is going to kindergarten and leaving them for the first time. It’s going to be okay, parents, your business is going to be fine. You’re going to be okay.

John (guest): 

I always thought that the business wasn’t going to be fine without me because that’s my way of self-rationalizing. I work all the time like I got like I need to. And my team said, “You know, John, you’re gonna take off for a week. Don’t call in, do I was like, oh, yeah, well, I’ll probably check in because my clients need me.” They said, “John, we’ve got your clients, your clients don’t need you. You need your clients.” And I was like, what? Are they gonna think about it, John? It’s a week, we can handle this. You are the one who needs them to need you. So the reason you check in with them, and what fills your batteries, is that you feel you’re helping them and that they need you. So you need to check in so they know that you need them.

John (guest): 

Wow, that was a wow moment for me. Where I was thinking I was doing it for them when, in reality, I love what I do and I love helping people. And it’s like, what else am I going to do to fill myself up if they don’t need me anymore? Like, what am I going to do if all my clients that I’m counting on don’t call me? Well, you better go find something else.

John (guest): 

Pretty powerful in the world of exit because now the company is no longer about me. It’s about our clients and taking care of our clients. And go figure out, John, how you’re going to feel relevant outside of this and build the company so it can continue to build and grow and support the client needs. And you find your own needs outside of your clients. And I was like, whoa, it allows me when you love it, right? I mean, you’re sitting around, it’s like telling LeBron James, “Yeah, it’s done.” And that’s the hardest part. And it’s growing, and it’s successful, and you’re having fun, and people are good. And I mean, so it feeds your soul. And then you want me to leave? What? Really? Why would I leave? That’s a great question.

Kathy (host): 

Yeah, it comes down to too much of a good thing. You know, it’s not anything that’s too much of it. Even if you drink your water, water is good for you. But drinking too much of it, you could still die from it. So yeah, you mentioned something with the employees. And I’m interesting to hear about from your perspective, and from the clients that you work with. We talked about the emotional side for the owner, obviously, they have to deal with that on their own way. But how does that reflect the emotional and personal side of the employees when they have been in such close contact with the owner and the owner tells them, “You know what? I’m exiting the business and the chances are, they’re probably not going to be here in the next six months.” How does that affect the team dynamic, if it does?

John (guest): 

Well, no one likes change. Human nature, people go sit at the same queue at church every day, every week. They sit in the same place when there’s no market, right? You go to the restaurant, order the same food because that’s where you can go, even though they’ve changed the menu, right? So, going to an employee and saying, “I’m gonna leave” is very unsettling. That’s why you have to do this over a period of time. You have to be able to devalue yourself as the business owner because really, what they want to do is they want to know that nothing’s going to change if I’m not around for six months. And I’ve told my clients, “You need to be able to take a month off. When was the last time you took a month off?” And they never taken it well. Then how do you think you’re gonna, if you don’t feel the company is going to survive? How was somebody else going to take this company over? Like, you need to build this company into a path where you can take a month off. In fairness, I haven’t taken more than a week off in 25 years. So, I’m not saying I’m good at that. But I’m saying I’m a better coach than I am.

​

Kathy (host): 

And I think here’s the distinction: whether you want to know if you can, because those are two different things. You can take a month off, and the world’s not going to fall down. But you just don’t want to. Or, you know, you can because you don’t have the right people who will be able to support the business. So I think those are two different conversations: whether you can, but you don’t want to, and whether you can’t because it really could hurt you.

John (guest): 

But I justified it, to be honest, right? I’ll self-rationalize. “Well, you guys could, you know.” And they’re like, “Actually, you can go take a month off.” And I’m like, “No.” And they’re like, “No, you can.” And I’m like, “And they’re like, ‘Try, try it.'” And I’m like, “Oh, you know, practice what you preach, John?” And I’m like, “Oh, my wife’s like, ‘Yeah, let’s go.'” And I’m like, “Oh, it’s fascinating, right?” It’s when you start learning. It’s about you. And it’s not about the business.

John (guest):

When your company matures to a place where you’ve got a good management team and you’ve got people there, and they’re like, “Go enjoy, we’ll be alright.” They actually feel empowered. It’s like a teenager going to college, right? They kind of get this little, “I’m taken care of because I’m in college, but I’m kind of this adult. I’m sub-adulting because I get to make my own choices.” But really, food, board, everything else is taken care of. So the employees are like, “Yeah, go play because mommy and daddy aren’t around. So, you know, we got it.” And you’re like, “Oh, geez.”

John (guest):

And to be honest, I feel like I can. But I do personally struggle with the idea. And that’s why I know it’s personal. That’s where business owners have to understand that exiting is much more than whether or not I can sell it and whether it’s valuable or whether it is. Really, are you willing to walk away? And have you structured the company where it is a child that has not been a 30-year-old in your basement that has eaten Oreos and cookies their whole life because you’ve totally helicopter-parented them? Or do they have smarts and intelligence and learn some bruises and figured out the way, and they can be fine? It’ll be different, but they’ll still be fine.

Kathy (host): 

Yeah, what are you building? And is there anything that you can do, even though, as we’ve talked about, the employees are telling you, “You know, go, go, go” when you tell them that you’re exiting, that it’s not just for a month, maybe two months, or whatever it might be? That it is essentially forever? Is there anything that you can do to alleviate that nervousness and, in terms of change management, support them with your decision?

John (guest): 

Yeah, so I would say like all change, if you do it over a longer period of time, the longer you have, the slower you turn the boiling water up on them, they don’t know that they’re boiling, right? If you walk in and go, “Okay, I’m done,” that’s not well, but I told my team five years ago that I’m building an exit, and I went out, and they said, “You’re only 50? Why? What do you do?” And I go, “You misunderstand my definition of an exit. My definition of an exit is, I don’t want to have ownership, I just want to be an employee. This company is growing, it’s bigger than me. I just like helping clients. And I have to run a company now. Like, I have to deal with people and processes. And really, what I want to do is just, I’m just a service product who likes to help business owners. I just want to go back to my wheelhouse.”

John (guest):

So I hired a new CEO, brought her in, brought in a CFO. They’re the future. My whole goal is, you guys, they have the ability to scale this company. They are scaling type people, they are management people. I’m an entrepreneur, I’m a street fighter and cowboy who just wants to get up and fight every day. That’s not how you build a company to be in. So if we want multiple locations, if we want to do these things, I’m not the person. So for me, my exit is I want to leave the ownership up to somebody else to incentivize them. And I get to be an employee. And I just want to be able to do what I want to do. That’s my exit. And that’s real, because I’ve learned what I know. I’m not going to quit, I’m not going to sit on a porch or go fly fishing or play tennis or something like that. That’s just not who I am. But I feel like I’m getting in the way of the success of the company, and that the company can keep going. And so I will exit in that way. And that is real. And that’s just like my employees saying they’re going to quit at some point. I’m the same way, you guys. I just feel the company needs to grow up and get married and go on its own.

John (guest):

So I think really, as long as you’re authentic with who you are and communicating that, everybody understands. I’m setting it up for success. I’m not leaving, I’m leaving ownership. But in the end, everyone has to make their decisions on if they want to be part of this. And if they like the new owners, if they don’t like the new C-suite, understand things are going to change. Okay, that’s how business works, but that’s how we mature and that’s how we grow up. So I don’t know if that answers your question. But that’s kind of how I’ve dealt with it. The longer you give them to process and be okay and give them the opportunity to succeed and grow. And as long as you put the business first, and as long as they know that you’re trying to set this company up for success, and your true heart is, “I want you to be a healthy company. And I want you to be part of it. And this is how I’m going to now participate in it, because this is my best wheelhouse.”

John (guest):

They’re smart people, right? They understand that there’s a difference between a business owner only looking out for themselves and saying, “I’m just going to do this,” and that are saying, “I want to build a future for this company and for you.”

Kathy (host): 

And you know what, as you were talking about the role of being an employee in the business versus the owner of the business, I wonder how does that, when that happens, when you go from being the owner to now being on equal footing with the other employees? How does that change the team dynamic, and how does it really work in practice? Not just in theory. Have you seen people who have done that successfully, and has it been difficult for them at the beginning?

John (guest): 

We’ll see this a lot in internal sale transactions. Where, “Hey, I’m gonna sell it to my kid or I’m going to sell it to some key employees, and they don’t really have any money.” So they gotta pay over a period of time. So the business owner wants to stay on. And so the business owner, though, all of the obligation lands on the business owner, in my situation, in me, and how I demote myself and respect and handle the process. My challenge as an entrepreneurial business owner is, in order to grow and scale a company and make it from owner-operator to professionally managed, we actually have to put in systems. And I’m not a systems guy. That is not my skill set. But in order to scale, you got to put in systems. And so agreeing to this is where you’re trying to go and supporting them is really all on the burden of the person stepping down. The dad has to understand that if you’re going to step down and you’re going to elevate your son or your key employees to this position, as the owner, you have to put yourself below them and answer to them. What’s your exit? Kathy, you’re advising all these business owners. What’s going to be your exit, Kathy? Tell me what your strategy is.

Kathy (host): 

Now, really, the strategy for me right now? I mean, this is a very young business. I think of it as a very young business, though even though for some people it might not be. It’s three years, three and a half years now that I’ve had it. And realistically, I would like to see myself as an employee because I do particularly enjoy working with clients. I love the analysis and love the strategy work around it. And I don’t have any particular wants right now to grow it into a multi-million dollar company that has all these locations. For me, it’s really, it would be great if someone can run the operational side. And I have people in the marketing department, and I am doing the actual customer delivery. And I have someone oversee everything else. I mean, that’s how I would like to structure the company. How that works practically, I am not sure yet. But it is true, you kind of have to eat your own food as well. So I am struggling as other business owners like, how do I make this so that it’s not completely dependent on me? And the way how I’m solving this right now is I’m always looking at everything from the business’s processes and systems. So that’s like my Bible. If we can put in a process and a system in there, and what is it that in whatever particular item it is and that process or system? Do I have to touch it? Or can other people touch it? And I’m a huge, huge fan of, and so people know on this podcast, delegation and outsourcing as much as possible.

John (guest): 

That is an absolutely great piece of advice, right? The game and service-providing business like yours is right when you’re in professional services. The reason you’re in it is because you’re so passionate about helping. And the same way as I am in whether you’re a doctor, a veterinarian, a financial planner, a CPA, I mean, they’re passionate about helping, and that’s where it becomes a challenge and building out systems. When you spend the time in the business or on the business and how do I balance those two things because you still gotta get your bills, you still got to pay the bills, and you still have to, you know, and it’s a challenge. It is definitely a challenge.

John (guest): 

But I would say without the goal. Ultimately, your exit could be so here’s my advice to you as an exit. If you’re not going to build the business out as a large liquidity event, then the best exit for you would be is take money out every year and build your reserves. So many business owners Just think that there’s going to be some big liquidity event. So they’re constantly investing back in their company. My comment is, is that doesn’t that’s not an exit and exit is I’ve put in 20 grand 50 grand a year, for the last 20 years. And I’m good now. So I can just shut this thing down, I can hand this over to somebody, and I achieved my goals, I got the freedom, the flexibility, everything I wanted. And that is still a great exit, I would say, people believe that they need a liquidity event in order to call it an exit, when the reality of it is an exit is that you’re leaving on your terms the way you want to, and you can live happily ever after and be very proud.

John (guest): 

I had an 82-year-old in here last week that said he thinks it’s about time to start thinking about an exit, he’s still got a good 10 more years on him that he wants to go, he has things he wants to do. Yeah, I think 82 is a good time to start planning your exit. But he’s been happy, doing his service, providing work doing what he loves to do, he gets his time off, he’s got plenty of money, his kids are fine, his grandkids he’s like, but I think I need to figure out what I want to do with when I’m, you know, if I just want to shut it down or not, like, great, just do it before your spouse, your widow, or your children have to figure it out.

Kathy (host): 

So, the other thing with service providers is, because you can think of it as you don’t want to sell the entire business. But it could be that you have certain assets that you’ve built over the years. It could be that you have a customer list that can be valuable to another provider, and you could sell that. So it doesn’t have to be that you sell the entire business as one package. But it could be that you slice it up into different assets that you’ve built over the years and you sell those off, right?

John (guest): 

Yeah, oh, you bring partners in. A lot of service providers bring younger partners in, right? So attorneys will have a younger attorney come in and start transitioning. Doctors, dentists, they start transitioning clients over, so then they work less hours. So then that business becomes a longer-term transition as well. So again, the idea of an exit is, “I have to sell my business and be done in a year,” and I get a chance because it’s just not true. That is not the only exit. There are plenty of wonderful exits. Just know that it’s going to be tough. It’s not going to be easy when you do it. And the sooner you can try to keep figuring out what that looks like and aim towards that when you build out your business model, then the easier that transition will be. So when was the last time you took two weeks off, Kathy?

Kathy (host): 

I actually believe it. Or that just took it. We are recording this in April, in March, but I took it in February. I took two weeks off, basically. However, I do now. How did it? Because I will not take full credit for it. I did still work a little bit while I was on vacation.

John (guest): 

So, well, I took a week off last week. But then I worked for a day and a half because I quote unquote had to. So, my goal is, I’ve told my wife, in 2024, I will take two weeks off. That is my goal. And then in 2025, I’ll take three weeks off. And I don’t know, I’m kind of having some anxiety around all of this. But I’m going to, I got to practice what I preach, you know? And if I’m ever going to get there, I have to try. So, that’s my commitment to you. Get to talk to any I that I took two whole weeks off. I mean, I still work. But I’m just saying that I didn’t show up to the office for two straight weeks.

John (guest):  

It’s so hard when you’re coaching people that you’ve got to do it yourself too. And it’s really hard.

Kathy (host): 

I actually know a business owner who’s a husband and wife team. And their goal is to take 90 days of vacation every single year, basically three months off. Originally, they started doing three months together, meaning they would work for nine months and take the other three months off. But then they started splitting that up. I think it’s a really great goal to have if you can do a couple of weeks every single quarter as you’re building the company. It allows you to see which systems and processes are breaking and need your attention. You can then figure out how to outsource, automate, or delegate those tasks even more. Additionally, taking regular time off also reveals how much unnecessary work you’re doing and helps you realize that you don’t need to be involved in everything.

John (guest): 

I know, but again, it’s how you feel valuable and when you’re in, you’re helping. So again, yes, I agree. From a CEO owner, I don’t need to. But as a John, over, I’m sorry, a service provider who fills his batteries by helping business owners get through these difficult times, it is what fills my batteries. And so that’s kind of the catch-22, right? So that’s where you have to separate John as an employee and John as an owner. And so this is where John as the owner can’t be an owner for two weeks. I gotta go on vacation. John has an employee, and whatever you guys got to do, you got to do it. Let’s go find out where the wheels are coming off. As you said, it’s a great way of testing. It doesn’t mean I can’t take my four clients and help them. But everything else, you guys ought to be able to handle. And you’re like, “Yeah, but if you take my son or my daughter and you go screw them, I’m gonna freakin’ come on, kid, you know, like, this is my baby.” And so it is fascinating how emotionally I react to the concept of letting go. And I think that’s the key piece. And everything we’re doing, Kathy, is making sure that the business owners understand that it will be emotional. And it’s okay. We’re all normal. We all care. It’s just because your heart’s in the right spot, and you’re doing what you love.

Kathy (host): 

Yep, exactly. So, John, we talked a lot about how to let go and what are some of the things that you can do. And there’s a lot of good stuff in this episode, and we definitely pulled out the curtains in our own businesses too. But you know, someone’s listening to this episode and saying, “Okay, so now I want something actionable, like what is it? If I am thinking of exiting my business, what can I do in the next week or two to get closer to that goal?”

John (guest): 

I think the number one step is to define what we call “define the win.” Like, why do you want to get out? What’s the triggering event for your exit? Is it age? Is it a specific monetary amount you need to be retired? Like, why? When are you going to leave? And why? What is that event? Because most business owners just get up every day and street fight. They go into our cage, we fight every day. And then, next thing you know, it’s written, the end of Q1. And we’re like, “How did March already get here?” When I could have sworn, I just finished my time. I just got the year-end closed. Like, I just, like, wow. And the reality of it is, if you don’t know what you’re shooting for if you don’t know what your end game is, you’re never going to get there. Because when I meet with owners and I say, “How far out are you?” What do you think my number one answer is? What do you guess?

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Kathy (host): 

I would expect that you would want them at least five years out before they start before the exit to start planning.

John (guest):

So when I interview owners and I ask them, “When do you want to get out?” their number one answer is “this year.” And then I follow up with more questions: “How do we plan? Do you have enough retirement? Do you have the right people in place? What’s your customer concentration? Can we even do this? What are you going to do with your life next?” But the interesting thing is, their second answer is always “I’m five years out.” They say five years because it’s close enough to see an end, but far enough that they don’t have to take action. Every year, it’s the same story. Their dad or boss keeps pushing the timeline, saying they’re five years out, and they never want to deal with it. It’s either now or five years from now, and it becomes a perpetual cycle.

John (guest):

So my comment is about the “when.” When is the triggering event? When I interview them, is it for convenience or for a specific reason? And what will they do next? How will they fill their bucket and stay relevant after leaving the business? They need to figure that out. It could be a financial goal like having $5 million in after-tax cash. Great, start putting money aside. It could be an age milestone like turning 65. It could be many things, but they need to find it and set that line. Otherwise, it will keep moving, and before they know it, they’ll be 65 and calling me, saying they’re ready to exit in a year, but they haven’t achieved their goal because they never defined it. So my number one advice is to define your exit win. Kathy, I’m going to call you in a week, and I want you to tell me what your win is for your exit. Once you have it defined, you can start building your path towards it. All right, that’s the plan.

Kathy (host): 

That’s great. Where can people find you?

John (guest): 

The best place would be our website, which has a lot of information about us and how to contact us. We’re at exitconsultinggroup.com. You can also go and get our book at exitandanswers.com. Both of those have great resources, great contacts, and we’re happy to meet and talk to anybody.

Kathy (host): 

Yeah, and as I’ve said at the beginning of the episode, it is an excellent, excellent book. So go get it if you can, and if that’s of interest to you Thanks, John. It has been a very enlightening conversation and I’m very grateful that you came on the show. Thanks so much.

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John (guest): 

Thank you, Kathy, so much.

Kathy (host): 

Thanks so much for joining us on today’s episode of “Help, My Business is Growing!” I hope you found some helpful tips on how to exit your business because, as we said, eventually that time will come. And it’s never too early, truly never is, to start thinking about your exit strategy.

Kathy (host): 

Also, if you loved this episode, you can find all the timestamps, show notes, blog posts, and links on the website: newcastlefinance.us/podcast.

Kathy (host): 

And before I go, as always, I have a little favor to ask. If you are listening to this on Apple Podcasts, could you please go to the show and tap the number of stars that you think the show deserves? This helps other people find it and gives us that Apple Podcasts algorithm loves that we need for more people to discover us.

Kathy (host): 

Thanks so much, and until next time!