Ep. 125 — Ryan: 2018 Recap and the Five Principles of Growth and Exit Planning

6 min read

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Episode Summary

You spent the year heads-down running the business, and now the calendar is flipping and you don’t actually know if any of it moved you closer to the outcome you want. Bigger revenue. More headaches. A fatter line of credit. Maybe an out-of-the-blue offer you didn’t know how to read. Your CPA does the taxes. Your banker manages the line. Your wealth manager handles the personal balance sheet. Nobody is sitting at the table connecting the value of the company to your lifetime cash flow, the exit options that get you there, and the team you need around you. This episode is my 2018 recap, and I’m doing it through the lens of the five principles I keep coming back to: vision, financial targets, exit options, value and growth drivers, and your team of advisors. I walk through the episodes from this past year that hit each principle hardest, why they matter, and what to do with them as you set 2019 goals. The big idea: if you know where you’re going and why, you stop being dictated to by product-driven advice and start running the plan yourself.

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## Top 10 Takeaways
  1. Your vision for the business has to come first, before any number, exit option, or advisor.
  2. If you don’t know what your company needs to be worth, every operating decision is a guess.
  3. The $200K lifestyle question: you need roughly $5M net working at 4% to replace it passively.
  4. There are dozens of ways to sell a company, and each one changes when, how, and how much you get.
  5. Topline revenue and bottom-line profit are not the same thing as transferable value.
  6. A company tied to you is not a company. It’s a job with overhead.
  7. Running an operating system like EOS or Scaling Up makes the company worth more to a buyer.
  8. Build the company to be sold whether you sell it or not. The discipline is the same.
  9. Taxes and deal structure decide what you actually walk away with, not the headline price.
  10. Your advisors should be team members inside your plan, not the people writing your plan for you.

Sound Bites

“Your business is going to be worth some amount of money. If you sold it after you pay down taxes, pay down debt, you’re going to put that into your personal balance sheet, and hopefully you can maintain that level of income.” (@TBD) — Ryan Tansom

“The advisor should not dictate your plan. They should be team members within your plan that is going to the places that you want to go for the reasons that you want.” (@TBD) — Ryan Tansom

“Build the company that’s worth selling to someone at some point so you can get the price that you want.” (@TBD) — Ryan Tansom

“If you know where you’re going, why, and what you need, then you can start hiring the people that fill in the gaps instead of having someone dictate all of your outcomes.” (@TBD) — Ryan Tansom

“Life and business aren’t just happening to you. You’re sitting in the driver’s seat.” (@TBD) — Ryan Tansom

About This Episode

A solo Ryan recap of the 2018 Life After Business season, organized around the five principles of the growth and exit planning process: vision, financial targets, exit options, value and growth drivers, and team of advisors. Ryan picks the episodes from the year that hit each principle hardest (Sherry Deutschmann, Arlin Sorensen, Brandon Wood, Brandon Hall, Ryan Turbes, Mike O’Neal, Daniel Goldstein, Tom Deans, John Warrillow, Bobby Kingsbury, Mike Paton, Mark Jordan, Dave Kauppi, Chris Steele) and frames why each one matters in the context of building the company you actually want to own and eventually exit. This episode sits early in the catalog, before the iBD methodology was formalized, but the bones of the framework are already here.

Resources Mentioned

  • GEXP Collaborative — Ryan’s firm at the time. — gexpcollaborative.com
  • Ep. 89 with Sherry Deutschmann — Employees are what make a company valuable
  • Ep. 98 with Arlin Sorensen — Build a platform and run the business like you’re selling tomorrow
  • Ep. 109 with Brandon Wood — How much do you need to sell your company for to fund lifetime cash flow
  • Ep. 114 with Brandon Hall — Business valuations deep dive with a certified business valuator
  • Ep. 115 with Ryan Turbes — Taxes and selling a business: how to calculate net proceeds
  • Ep. 103 with Mike O’Neal (Stone Arch Capital) — Private equity recapitalization: how it works
  • Ep. 113 with Daniel Goldstein — Running a 134-year-old ESOP
  • Ep. 121 with Tom Deans — Why you should sell the family business
  • Ep. 116 with John Warrillow — Eight ways to increase the value of your company
  • Ep. 91 with Bobby Kingsbury (MCM Capital) — Valuing a business from the buyer’s perspective
  • Ep. 85 with Mike Paton — EOS / Traction and getting a grip on your business
  • Ep. 99 with Mark Jordan — How to hire an investment banker and sell your company
  • Ep. 120 with Dave Kauppi — How to play the M&A game: de-risking, building value, and selling a company
  • Ep. 108 with Chris Steele — Protect the value of your business: how to use insurance in your exit plan
  • Built to Sell by John Warrillow
  • Get a Grip by Mike Paton and Gino Wickman

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