If you own a business, you may not be thinking about your eventual exit. The truth is that you may leave millions of dollars on the table if you don't start with the end in mind. Hear how others have sold their companies and learn how to ensure that you have a plan before you take an exit.
noun /ˈek.sɪt/ /plæn/
The Exit Plan is really about having exit plans. The journey to financial independence comes from having plans, not just a plan. And, it starts by understanding that you are on a journey. Very few people go from rags to riches; or from W2 employee to successful entrepreneur. There’s a story behind every big success, and because that story isn’t sexy, it’s not a popular subject.
Most people get stuck in the big idea myth. That’s the thinking that you can only make the leap to see employment by having a big idea or getting a big investor to back you. That’s actually the exception. Not the rule. But most folks watch Shark Tank and dream of their big idea, or they watch the startup scene for unicorn stories, and eventually give up because they never have a big idea. When you think that you need a big idea, you’ll never get the courage to make the leap to entrepreneur thinking.
Big ideas and unique products are the enemy. Your old ideas about success and entrepreneurship will only get in the way. You’ll have to put them to rest and not let them hold you back from what’s actually a proven path that’s right there under your nose.
There are literally millions of set employed millionaires who have never had a shark tank idea. That’s right. They own businesses. And they’re rich. No investors. No crazy ideas and big risks. That’s what I’ve done. And it’s what works.
The exit plan I’ve seen from interviewing hundreds of entrepreneurs is the same message I share in my book The King’s Flyswatter: its about how you can take a totally different perspective on your work to turn your job into a pathway to entrepreneurship.
Your first exit, the exit from work to owning your time, is about how to leverage your job. Even if you hate your job, this is the path for your eventual exit. If it’s not your current job, you might make a job change just to do what I’m going to teach you.
That’s right….to become an entrepreneur, find the skills you need at a job! Get paid and get the skills you need to have multiple exits in the future. I’ve even gone back to a w2 job just so I could learn what I needed to in order to become a better entrepreneur. And use that as a stepping stone to my exit plan.
Don’t miss the opportunity to leverage your job in ways you never thought possible to become an entrepreneur when the time is right. Which might be in 6 months or it might be a long game where your exit plan gets you free a couple of years from now.
Maybe you’ve already had your first exit, the exit from working for the man to working for yourself. Congratulations. It is a big deal and one you should be proud of. If you have a business that brings in enough for you to pay your bills, that’s a giant leap from being stuck at a W2 job. Celebrate your success…and begin to get your head around your need for a second exit.
You need to turn your business into an asset. To do that you need to work yourself out of your job as the operator. Even operators who make millions of dollars but who are stuck in the daily operational grind are working for their money. The problem with that is that you need to spend your time being an owner, and enjoying the fruit of your investment, and not dragged down into the muck and mire of the day-to-day business. Not only are you going to miss out on living your dreams, but you are going to have a hard time taking your third-exit.
Your third exit, which I’ll talk about more, is about selling your business and cashing out. That doesn't mean you are out of the game! It means you now have a stack of chips on the table, and you can use those chips to keep playing the game and grow your wealth with your knowledge as well as the excess capital you extract from selling your business.
I’ve bought and sold a dozen times over the past 30+ years. There is nothing quite as gratifying as taking a business you’ve built or grown and selling it to someone who is probably going to make it bigger and better without you.
Not everyone agrees with me.
Many business owners fear the sale. Their ego is tied to the business. Their identity. Their predictable cashflow. They may want to preserve their legacy. Most owners want to ensure their amazing staff can continue and grow in their careers.
Some business owners hear that selling their business ruins it; maybe private equity groups will run it into the ground; maybe the buyer will fail and not pay off any holdbacks or promissory notes. Some owners simply won’t sell because they have a number in their head…an imaginary number that if only someone will pay it, they’ll cash out and retire.
The Third Exit, if done right, can be a glorious thing. Certainly many deals go south. But, most go quite well, and enable a business owner to take some chips off the table, and enter a new game, playing for another exit, and another, and another.
That’s right. Selling a business gives you a ticket to a new club and the ability to move from owner of one asset, to the owner of multiple assets. Many sellers take millions of dollars off the table and keep helping the buyer run their business. Other sellers sell and take equity in a private equity fund that might triple their money. Some sellers take the experience of building, growing and selling and turn that into an expertise. Once you’ve grown and business and sold it, you can take that experience and help others do the same. And, as you do that, you’ll be making money for your time, and if you do it right, making money on the exits you help facilitate.
The roadmap from Exit 1 to Exit 4 isn’t as complicated as most people think.
Still an employee? Learn from the business you work for. Grab my course, Employee to Entrepreneur and read The King’s Flyswatter. Click here for our E2E resources.
Small business owner, stuck in the daily grind? Listen to the stories on the Exit Plan podcast and look for tools and resources to level up from operator to passive owner. Click here for a resource page for overworked operators.
Own a business that doesn’t make you work every day? Now its time to understand what buyers demand. Whether PE or strategic, you need to understand how they work and what drives value. Design your business for a sale, and while you own it you get all of the benefits. You can borrow with ease if you are always running GAAP books and a clean financial business.
Listen to the stories of how employees went from E2E, and learn from the folks who have taken their business from owning a job to owning an asset….and finally, listen to stories of how people have achieved the big exit, and what they’ve done after a sale.
Want to come to an event that’s exclusively for business owners learning how to sell to private equity? Sign up for Beach Camp and we’ll put you on the invite list.
Thanks for reading this and thanks for supporting the Exit Plan podcast.
After interviewing over 100 entrepreneurs on the Opt Out Life podcast, I came to realize that there was a common theme for most entrepreneurs. They had all begun their journey doing something they learned from a job. Often it was a job that was unremarkable, or even a job they didn’t like. If you are starting out on your journey as a business person, start with that simple truth and listen to the stories of others who have taken the same path.
Once you own a business, you might make the same mistake I’ve made and sell that business before you’ve really taken the time to understand how to prepare for a sale. What does private equity mean? What is a multiple of EBITDA? How can you optimize your business now, even if you may not sell the business for many years? The podcast and resources I share are free for anyone who wants to make the most of their time, and build a business that gives you the exit plan you deserve.
Reach out with questions and let me know what I can do to help you along the way, whether you are just starting out, or a seasoned operator who is thinking about selling your business.
Hear the stories of entrepreneurs from startup to sale and hear from the professionals who helped them achieve their exit.
