Transcript
Matthew: What is the one question you want our listeners to ask themselves? Is it, am I actually ready to sell? Is it am I ready to give up my first child? Is it am I ready to have three months of excruciating pain in ways I can never even predict?
Mark Herbick: I'm speaking at a mastermind group here in a few weeks, and the facilitator of the mastermind group said everybody in this room is kind of all across the board as to what stage they're at. Some people are thinking about an exit in a year, some people are thinking about an exit in ten years. So what is universally applicable to everybody from a topic standpoint?
And my response to that is that everybody should be running their business as if they plan to exit shortly. Everybody should be running their business thinking about enterprise value and not revenue and profitability.
Because what happens is the desire to exit is like the turkey in the oven. You're sitting there looking through the window, and it's like, nope, button hasn't popped yet. Button hasn't popped yet. Man, three hours has gone by. The button hasn't popped yet. And then all of a sudden you turn your back and the button just suddenly popped. It's like a minute ago I checked and it was down and now it's up. That is how the motivation to get out of your business works.
You don't get early warning signs that you clearly understand. The early warning signs are, man, this is a bad day, man, this customer's doing this. Boy, this employee issue is doing that. You don't know if that is just traditional business ownership drama, or if it is an early warning sign that you're not going to deal with this anymore and that you're just kind of done. And then oftentimes, most of the time, what I see is people just wake up and they say, you know what, that was the last straw.
Three straws ago, I didn't know the last straw was coming. There's a reason that statement is what it is. It's like it just took one straw and the camel collapses. And that's the way owning a business is, because every day you own your business, in most cases, it's another straw, another day being thrown on your back. And it's gonna break. If you haven't been running your business as if you were going to sell soon, it's too late to make the changes that you're going to need to make to your life and to the business that are going to allow you to exit optimally with optimal enterprise value.
So the short is there is a big difference between building enterprise value and growing a business. You have to know the difference in those formulas. You have to understand value drivers, you have to understand growth drivers, you have to understand how to leverage those, how to pull the trigger on those.
And then you also need to be thinking about yourself as a business owner. We've got a potential client we've been talking to for a long time. His name is Roger. He's got this manufacturing business, built it into a hundred million dollar plus operation. And Roger's super tired, doesn't want to do this anymore, but Roger is scared to death to sell because he has done nothing outside of his business. Ever. He will walk out of the business and walk into nothingness. And he is afraid literally that he will die.
Once you sell your business, your customers don't want to be your friends anymore, your employees don't want to be your friends anymore. All the trade shows you used to go to and rub elbows with your buddies or your competitors, you're not going to go to those shows anymore. So your whole environment changes. So the other part of it is really making sure that you have a life that goes beyond the business. So you have something to go from and to.
