Michelle Seiler Tucker is known as ‘The Closer,’ having bought, sold, and fixed over 1,000 businesses. This episode is packed full of insights and tips based on her experience. Why do entrepreneurs fail to sell their businesses and others secure huge exits? What mindsets limit founders? How do you balance the good and the bad times? What can you do to start your business in a way that is likely to create success? Finally, hear Michelle’s 6 P’s method, which will help any entrepreneur, founder, or business leader grow their business profitably and avoid the pitfalls of so many organizations, both big and small.

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Plan Your Exit Now | Michelle Seiler Tucker

We are going to continue a theme as we explore the entrepreneurial and founder mindset. Research suggests that between 2013 and 2019, 30% of startups go out of business. Why? We work with loads of corporates who want their employees to have the mindset of the founder and the entrepreneur. Again, the question is, “Why?” We need to talk to someone who can answer those questions, and I’m delighted that I have a guest from New Orleans, Michelle Seiler Tucker, who has sold over 1,000 businesses, so she will be able to help us with all of those questions.

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Michelle, you are smiling after that intro as you are probably wondering what was all that about but welcome to the show.

Thank you, Adam. Thanks for having me. It’s a pleasure to be with you.

It’s great to have you. I know we chatted before, so it’s a huge hello from New Orleans. I know that you have been featured in Inc, Forbes, USA Magazine, Fox Business News, CNN Radio and TV, so I’m delighted that you are now with me on the Leadership Enigma. Tell us a little bit about what you are doing at the moment because I introduced you as someone who’s sold over a thousand businesses but there’s a story there somewhere. Start us off. What are you doing now?

What am I doing? I’m Selling businesses. My story, I will make it quick. I have always been into entrepreneurship. I have always been passionate about small business. I’ve owned many different businesses in many verticals. I did get stuck in Corporate America, where I went to work for a Fortune 500 company called Xerox. Xerox recruited me from the competition because they couldn’t beat me.

Xerox hired me, and within six months, my nickname became The Closer. Every time they couldn’t get a deal closed, they always said, “Call Michelle. She will get it closed. She can close anything.” My supervisor came to me and said, “Michelle, you should apply for the regional vice president position. You will never get it because you’ve only been here for six months since Xerox’s policy is two years before they promote. Plus, you are going to be interviewing with a lot of other people who have been here for many years.” I said, “Why would I interview for something I’m never going to get?” It sounds like a colossal waste of time. She said, “It’s because of the experience. You will learn more throughout this entire process than you have ever learned not doing it.”

She said, “It’s a three-month process,” which it was. It was a grueling three-month process where we had to meet with all the high-level executives to do Q&As with executives, presentations, and demonstrations of the Xerox equipment. I ended up getting the position. I truly am The Closer because I was told that I broke all rules or Xerox broke all rules to move me up to that position.

I always tell big companies, “If you have a closer, don’t promote them to management. Leave them in closing because that’s what their core competencies are.” When I went to management, I liked management. I like leadership. I don’t like management and leadership in a Fortune 500 company because you have meetings instead of follow-up meetings to schedule more meetings, and you can’t make decisions.

It’s hard to solve problems because you have to round-table it and go through a chain of command. It takes forever to get anything done. I ended up leaving Xerox and transitioning into franchise sales, franchise development, and franchise consulting. My buyers kept saying, “Do you have an existing business?” I kept saying no. All of a sudden, I’m like, “I’m not saying no. I should be saying yes.” The universe likes yes, so I should be saying yes.

That’s when I transition into buying, selling, fixing, and growing businesses, really selling businesses. I learned very quickly that what Steve Ford says is true, “8 out of 10 businesses will not sell.” That’s 80%. I said, “If I don’t fix these businesses if I don’t grow them and put them on a build-to-sell program, I’m going to store off to debt.” That’s where I transition into buying, selling, fixing, and growing companies. I partner with business owners, investing my money, my time, my energy, and my efforts. Also, buy businesses and flip them. Plus, we sell and merge them. That’s our core competency.

There you have it. As you say, you put your own money into many of these ventures, so there’s skin in the game. Let me backtrack slightly because as you were entering this field, I know you’ve got many years of experience now in this field. You spoke about the fact that 80% were unable to sell. As you started to explore, did you find out why that was? What was the blockage? What was the stopper for so many businesses failing to sell?

The mistakes are pretty common. The number one mistake that business owners make and why their business is not sellable is that they never think about their exit. They never think about selling the business. Therefore, they never plan their exit. They never think about it until a catastrophic event has occurred. That could be an internal event, which could be health issues, divorce, partner disputes, external and COVID.

The worst time to sell your business is during a catastrophic event because your business is typically turning downward. The best time to sell is when your business is doing well when your business is in its prime. It’s very important to build your exit, to plan your exit from day one of buying or starting your business. I’ve met thousands upon thousands of business owners and never met one business owner who has planned their exit from the beginning. That’s the number one reason that businesses are not sellable.

Some people talk about it as the curse of the founder because their businesses are almost like their children. The mere thought of exiting or selling is abhorrent to them. How do you work with founders to start to change that mindset?

That’s a big issue too the mindset. Number 1) Not planning. Number 2) The mindset that they do look at their business as their child. Think about it. Most business owners spend more time with their businesses than they do with their own families. They do think of it as their child. They are so emotionally connected to it and are not treating it like the valuable asset that it is. They are not putting the energy into building an asset to somebody wants to buy. The other reason that businesses don’t sell is that business owners haven’t created a valuable asset that somebody wants to pay for.

Business owners need to stop thinking about their businesses as their babies. They need to think of it as the most valuable asset in their life. It’s strange to me because we plan for everything else. If you have children, you plan where they are going to go to preschool, elementary, middle school, high school or college or how many grandkids are going to give you but we don’t plan for our business.

Why is that? Are they stuck in the weeds? Are they too emotionally tidy?

It’s a combination of things that they are passionate about in their business, so they love it. They think they are going to do it forever. We both know nothing lasts forever. They think they are going to do it forever but nothing lasts forever. Number two is that they think of it as their child. They are too emotionally connected and are stuck in the weeds.

Plan Your Exit: Business owners think of their business as their child. They’re too emotionally connected and stuck in the day-to-day that they never really plan for the future.

They are stuck in the day-to-day, so they never plan for the future. What do financial advisors do? They put us on a plan. If we say we want to retire and want to be able to live on $500,000 a year, they put us on a roadmap to get us there. That’s what I do with my business owners. They will put them on a roadmap to get them to their desired price tag so that they can sell their business, take that money, invest it, and retire.

Do you find that you have an upswing in people coming to get your expert help when the times are good or when the times are bad, and perhaps it’s too late? We are coming out of a global pandemic. You and I have spoken before. Now you are in New Orleans, so you’ve lived through Hurricane Katrina as well. Help me with that. How does that balance work between the good and the bad times because it’s constantly changing?

It is constantly changing. Unfortunately, sellers come to us when a catastrophic event has occurred. That’s typically in the pandemic. That’s during the pandemic. That’s during Hurricane Katrina instead of coming to us when times are good. You should be coming to us when times are good, when you are in the middle of your prime, not when you are in the middle of your chaos.

I’m in New Orleans. I’m not from New Orleans. I’m from California but I went through Hurricane Katrina. About 95% to 98% of my client’s businesses literally went underwater, and that taught me a very valuable lesson back then. That taught me to diversify. That’s taught me not just a diversifying industry or diversifying in the start market but to diversify in location. Not just to have a business in Louisiana.

Now I have businesses in Texas. I have businesses in California and South Africa. That’s taught me to diversify in different states, even countries, because if something happens, then I have this over here. One of the biggest mistakes that business owners make is that they don’t diversify. Look at the restaurant industry. These owners have one restaurant.

All their exit are in that restaurant’s basket. They have no other congruent revenue streams. They have no other income coming in, and they have maybe 1 to 3 months of working capital. They are not positioned for a catastrophic event. Business owners have to learn from this pandemic. They got to learn that they have to have multiple streams of revenue. They must diversify and have at least one year’s worth of working capital.

It doesn’t just need a catastrophic event, does it? It’s because time change so quickly. For us, maybe exit is the next thing on the horizon for us to deal with the post but it’s always going to be something.

It’s always going to be something, that’s right.

Why are business leaders continually caught out, then? It’s because history tends to repeat itself.

One thing that you said at the beginning of the show is that 30% of startups go out of business. When I wrote my first book in 2013, Sell Your Business For More Than It’s Worth, I did the research back then and learned that 85% to 95% of all startups will go out of business. That’s common in America. When I wrote Exit Rich in 2019 and 2020 and did the exact same research, I learned that only 30% of those startups are going out of business.

That’s great news for startups. However, in America, at 26.9 million or 27.6 million businesses, those businesses have been in business for ten years longer. Seventy percent of them will go out of business. Now the business landscape has flip-flopped in the United States. It used to be that if you made it the 6, 7, 8, 9 or 10 years, you were golden, and you were going to be in business forever. Now, you are going out of business.

In America, they talk about the big public companies all the time like Toys“R”Us, which was in business for 75 years, going out of business. Kmart, Stein Mart, JCPenney’s and Pier 1. Godiva is closing down 1,500 locations but they are not talking about the private companies on every street corner, town, and state. These business owners are exiting poor, and they are selling from pennies on a dollar. Closing their business, or even worse, filing bankruptcy.

This is their lifetime work, isn’t it? I’m seeing that here as well in Europe.

This is their lifetime work, and that’s why I wrote Exit Rich. Exit Rich couldn’t be a better time now to have Exit Rich come out.

Exit Rich: The 6 P Method to Sell Your Business for Huge Profit

Tell us about that.

Those numbers, by the way, are before the pandemic. Exit Rich is all about planning your exit strategy from day one at buying or selling the business. It’s all about mindset. It’s all about deciding when you should sell. It’s all about mapping it out so that you can get your desired sales price, so you can finally retire and get the life you deserve of. Also, how to build your business on the infrastructure with what we call the six Ps.

I want to deal with the six Ps but before I get to the six Ps, you see founders and leaders within all of these businesses. This show focuses a lot on leaders and leadership. You are going to see good and bad leaders. We talked before about how some of those leaders that you see are control freaks. They don’t hire for their own weaknesses. They are too emotionally tied. If someone was about to start with great passion, their own business, what advice would you give them from a leadership perspective, so they could perhaps get things in place and start as they mean to go on?

Two big things. Number one is that leaders have to have a plan. Most leaders are visionary. They are not integrators. They are visionary. Leaders must focus on their strengths and hire their weaknesses, not get stuck in the day-to-day. Figure out what your core competencies are and work on the business, not in the business. I want to tell you, before we get into the six Ps, how you should start your end from the beginning. That’s called the ST GPS Exit Model. From the moment at starting or buying your business, you need to have an endgame in mind. When you want to drive somewhere in London, what’s the first thing you do if you have never been there before?

I want to know where I’m going.

You pull out your Google Map, and you plug in your destination. That’s the problem with business owners. They don’t have a destination. They drive around in circles, up and down the financial hills ending up nowhere. You need to know where you are going. Otherwise, you are never going to get there. Number one, you need a destination, your endgame and your desired sales price. I always tell my clients, “Pick a number. If you want to sell for $20 million, great. That’s a number.” Leaders and entrepreneurs get hung up on a number.

Don’t get hung up on a number, just pick a number. It doesn’t matter. You might hit it, and you might not. Let’s say you want to sell for $20 million. The next thing the GPS Exit Model needs to know is your current location. Where are you starting? In other words, what is your business worth now, your valuation? I don’t know if you know this but most business owners never even get an evaluation on their business.

I met with a guy that has been in business for 50 years. He’s never had his company evaluated. We go to the doctor once a year to get a physical checkup to make sure our hearts are still ticking, and we are still kicking. We drive a car to the shop to get an annual checkup but never get an annual business valuation checkup. It is financial suicide.

There are events to increase and decrease your evaluation like this pandemic. It’s decreasing evaluation for a lot of industries. You must know what your business is worth on a year-to-year basis. Let’s say you are worth $3 million or $5 million. Let’s say you are worth $5 million and want stuff for $20 million. Now you need to know the timeframe.

You are not going to do it in a year. Let’s say ten years. Now, what do you need to know? You need to know who your buyer is going to be. You are going to have to reverse engineer to sell a $20 million business. There are five types of buyers. I will tell you who your buyers are not going to be. It’s not going to be a first-time buyer because they buy small businesses and turnaround specialists.

The second type of buyer buys distressed assets. The third type of buyers is probably equity groups. These are pegs. They buy based on the platform and add-ons. You have to have an EBITDA of at least over a million dollars for them to even consider you a company for sale. You got strategic competitors. Sometimes they pay the highest multiple value because they are buying synergies.

You then got your sophisticated serial entrepreneur that is industry agnostic and chases EBITDA and cashflow. What you need to know is, “Where do the financials have to be? For me to sell a business for $20 million where’s the top line need to be? What are profit margins?” Most importantly, the EBITDA, Earnings Before Interest, Taxes, Depreciation and Amortization. “Where do those numbers need to be?” To sell for $5 million, you need to have at least 3 million to 5 million in EBITDA.

You need to know, “What characteristics are they looking for? What synergies are they looking for? What will make a buyer pay more for my business?” The most important thing is to know your why. Everybody has to have a why. It’s got to be the why because, at the end of the day, if it were easy to sell a $20 million company, everybody would be doing it.

You have to have a strong enough why to keep you in the game, keep you motivated, and keep you weather and all the financial storms. What do you do? Now that you know your numbers, you have your plan because business owners don’t fail the plan. They plan to fail. You can build your business based upon the six Ps to meet those buyer-specific criteria.

We are going to move into the six Ps, and I’m going to ask you to give us a little bit of context about why you created the six Ps. It’s probably obvious to me why you created the six Ps with what we are talking about. Many founders, as you say, are visionaries. They are gifted in their insights regards perhaps a product or a service but the devil is into detail and they need somebody else for it. Tell us why you created the six Ps.

I created the six Ps because I noticed that it doesn’t matter what the industry is. The problems are the same. When a company is not making money, it’s because they are not doing something in one of these Ps. The industry is irrelevant. The mistakes that business owners make are always the same. We sensor evaluations around these six Ps because it is important to evaluate a business based upon the EBITDA but more important than the cashflow of the business is those synergies and what synergies buyers are willing to pay top dollar for.

Take us through. We are going to take our time so that we are clear on this. What’s the first P then, Michelle?

The first P is People like you said earlier, business owners. The number two reason that businesses don’t sell is that a business is 1,000% dependent upon the owner. If you take the owner out of the business, there is no business. People are very important. You got to focus on your strengths, hire your weaknesses and make sure you have the people in the right seat.

Plan Your Exit: You have to focus on your strengths and hire your weaknesses. Make sure you have your people in the right seats. Don’t build a business; build people and let them build the business.

You don’t build a business. You build people, and people build a business. You got to have the right people in the right positions, and then you got to ask the who question, Adam. “Who opens the door? Who handles customer service? Who handles marketing, legal, accounting, manufacturing, logistics, distribution, and environmental?” The list goes on and on. The clue is that you should never be next to the who.

All of your readers need to write down all of the things that have to get done in the day. I call it the who test, and then they get to fill out who does each task. It shouldn’t be you because you need to build a business that runs without you. If you are trying to sell a business for $5 million or $10 million, you have to have a layer of management in between.

You got to make sure that you have that chief operating officer or general manager in place, that chief financial officer, etc. People are number one. You will never get anywhere without people because if you don’t have people, you have a job. A lot of business owners have created a glorified job in which I go to work every day versus a business that works for them.

We have a dentist that came into us and wants us to sell their practice. They have been in business for 45 years. 1 dentist and 3 dental hygienists. I told them, “If we sell it, you have to stay for 2 to 3 years, and the price is going to be attached to that.” He goes, “I’m not staying.” I go, “If you are not staying, you are not selling because the minute you leave, the patients leave.”

Number one is people. What’s the second P?

It’s the Product. Product is your product, your service, and your industry. You have to ask yourself, “Is your product or industry on the way up or on the way out? Is it thriving or dying? Do you have an Amazon up here or do you have a Blockbuster, and you are about to go bust?” Unfortunately, because of the pandemic, there are a lot of industries that are going bust now.

That doesn’t mean because you are in an industry that’s dying, that you go home and curl up into a fetal position. It means that you got to get creative. You should call an expert, a mentor or somebody like you or somebody like myself and start asking different questions. You are never going to get different results if you keep doing things the same. One of the number one reasons that 70% of businesses are going out of business after being in business for ten years is because they stopped doing what I call AIM.

AIM is Always Innovate and Market. In a product, you always have to innovate. Like Toys“R”Us did nothing different in 75 years. Blockbusters sold on Netflix, and they didn’t do anything different. They had an opportunity to buy Netflix, and they never innovated. That’s the problem with these business owners that have been in their business. You cannot be stuck to your concept. Ask yourself these story transformational questions.

Number 1) “What business am I in?” Amazon did this in the ‘90s, “What business are we in?” They said, “We sell books. We are in a book-selling business.” Number 2) “What do you do well better than anybody else?” Amazon said, “We do fulfillment better than anyone else.” Number 3) “What business should I be in? Should you be in?” Amazon said, “We should be in a fulfillment business.” Those three questions are transformational. Business owners have to get out of trans-actional and get into transformational. These three questions are what transformed Amazon from a small bookstore to a multibillion-dollar worldwide conglomerate.

One of the things at the moment is that when we speak, even people working in large corporates are in survival mode now. They’ve stopped thriving, and they are surviving, and people want to very quickly move back into thriving mode. We’ve got People and Products for the first two Ps. The third P is Process. Is that right?

Process. Process, however you want to call it, is very similar to exit strategies.

We are international here, Michelle.

That’s what I love about Zoom. We can meet people all around the world without getting on a plane but at any rate, so processes are like exit strategies. Business owners don’t think about them until something bad has happened. Processes are the same way. We are selling the manufacturing business, and an employee got hurt on the manufacturing floor, and it’s a catastrophic event that the company is going to be sued. They probably will go into bankruptcy court, and we are trying to sell them. The owner says to me, “I need a process for that.” I’m like, “You are a little late. You needed one before this.”

The horse is bolted. The horse is gone.

Processes need to be designed from the beginning of buying or starting a business. This is where most people get it wrong. Most people design the processes around their own agenda. I’m going to give you an example, chiropractor’s offices. “We are open Monday, Wednesday, and Friday from 9:00 to 12:00. Close from 12:00 to 3:00. Open from 3:00 to 5:00. Tuesday, we are open noon. Friday, we are open.” Nobody can ever go to them because they are designing their processes on their hours and what works best for them. You got to design your processes with the client experience in mind. McDonald’s did this back in the ‘40s. McDonald’s started a fast food restaurant. Did you ever watch the movie The Founder?

I haven’t but that was about the start of McDonald’s, wasn’t it?

That’s about the start of McDonald’s with the McDonald Brothers, and then Ray Kroc came in and everybody says he stole McDonald’s. He did not steal McDonald’s. He came in and grew it, and they didn’t want to grow it. Anyway, McDonald’s started McDonald’s back in the ‘40s around the customer experience. They said, “We want our customers to experience great-tasting food that’s hot and fast.” You can eat at McDonald’s anywhere in the world and get the same experience.

It never says it’s going to be healthy. It never says it’s going to be organic. Have you ever dealt with a company where you are like, “It’s so frustrating?” Maybe you had to talk to six different people to try to get resolve your problem. You are like, “I will never do business with them again.” It’s because they designed the processes around their own agenda. You need to design the processes around your own customer experience. If you don’t, your competitors would be happy to do it for you.

That’s the lack of customer centricity, isn’t it, Michelle?

That’s right. You need to deliver a wow experience. At High Point University, they have a director of wow and a director of unwow.

I like the director of wow. That’s a pretty cool job title.

It’s very important. Your processes have to be designed with the customer experience in mind. They have to be productive, efficient and documented. You need to have some policy and procedure manuals. You need to have an SOP checklist. You need to have those employee handbooks and the non-compete for upper-level management because buyers will not buy the business without all this documentation.

This is all the stuff that people don’t want to do. The devil in the detail.

They don’t want to do it because no business owner likes paperwork. No business owner likes to detail.

I’m guilty as well of that.

We are entrepreneurs. We like to grow.

That’s the first 3 Ps. What’s the 4th one?

The fourth one is the highest-value driver. This will get you a high multiple than any other P. Businesses that have an EBITDA, now this is America. I’m not sure about the UK but businesses that have under a million dollars in EBITDA typically trade for a multiple of under five. Businesses that are over a million dollars in EBITDA typically will trade for a multiple of over five, depending upon synergies. Get this P right, and you could get maybe a multiple of 6, 7, 8, 9 or 10.

This is Proprietary. There are six pillars for proprietary. Now this one is going to take me the longest to explain. The other two Ps are short. Branding is huge. The more well-branded you are, the more I can sell your business for as long as your brand is relevant in the mind of the consumers. Meaning, is anybody going to pay money for Blockbuster?

Plan Your Exit: The more well-branded you are, the more you can sell your business. As long as your brand is relevant in the mind of the consumers, you can get a much bigger exit.

That would be a no.

The biggest, most valuable brand in the world is?

Apple.

You win.

I’m good at this.

You are good at this. Maybe we do like a game show, an Exit Rich game show. Apple is worth $249 billion without EBITDA, without inventory, without assets, the account receivable, real estate or anything else. What does that tell you? That tells you to build your brand and you will get a much bigger exit. Trademarks are huge. Trademark your company name, your slogans, your podcast, anything that’s your USP, Unique Selling Proposition.

Now, here’s a mistake that business owners make in America. They will go to Texas or California and get a state trademark but they never checked the Federal database to make sure that name is available. After being in business for 5, 10 or 15 years, they receive a cease-and-desist letter and amount. They have to stop using that company name.

See the lawyer in me then goes, “Ouch.”

The lawyer in me goes, “I charge you a bunch of money.”

Possibly as well.

I always tell my clients, “You can hire a lawyer and throw money at it but in all likelihood, you are probably going to lose.” They got to start the rebranding process all over again. In America, it’s only $1,500 or $2,000 to get those Federal trademarks. Get the Federal trademarks and protect your IP also for products. I’ve had restaurants and companies that have products that sell the grocery store chains, and they have Federal trademarks for each one of their products. That adds huge value. Patents, have you ever watched Shark Tank? Do you all watch Shark Tank in the UK?

We have Dragons’ Den here but I’ve watched both versions.

What does every investor always ask?

“Do you own the legal rights to whatever it is that you are trying to sell us?”

“Do you have a patent on this? Do you have a utility patent? Do you have a patent pending?” I will give you an offer contingent upon the patent. What does that tell you? Patents are very valuable. We were sold a manufacturing company that was losing money but they had eighteen patents, so we sold it for $18 million. Patents are huge, and then contracts, manufacturing contracts, vendor contracts, distribution contracts, and franchisor contracts have franchisees.

Client contracts are extremely valuable, especially in the ones that have reoccurring revenue and a subscription model, because buyers love to buy companies with reoccurring revenue. Now here are the caveats of contracts. In the United States, again, I don’t know about the UK. I never claimed to be an expert in the UK but in the United States, 99.8% of all sales are asset sales.

Most business owners don’t have the two cents of transferability clause. It says, “This contract is transferable to the new entity.” If your buyer is not willing to transfer to a stock sell and your clients won’t sign a consent of transfer agreement, you are in big trouble. Be a step ahead of the game, and make sure you get that two cents of transferability clause. Databases are big. It’s huge. Facebook paid $19 billion for WhatsApp, and WhatsApp was making how much?

Not a lot.

Not only were they making zero if they were hemorrhaging but they had a synergy. This is all about synergies. They had a billion users, and Facebook knew they could monetize and they could ROI off that acquisition. They went ahead and purchased it for $19 billion. Celebrity endorsements are very big. Anytime you can get Oprah or get any type of celebrity, that’s huge.

Maybe my next guest. I don’t know. She might be busy. I’m not sure yet.

Competitors and strategists will pay more money for celebrity endorsements because our thought process is, “I can get my products in front of Oprah. I can get my products in front of.” The other big thing is to write personality endorsements because they can only endorse one vertical at a time. Otherwise, they completely lose credibility.

It’s very hard to get that radio real estate to that call. Online presence, if anybody can get any of the top three positions on Etsy, Wayfair or Amazon, those are big assets that competitors and strategists will look for. When we are evaluating a business, we go through these six Ps and identify the synergies. Plus, we identify what buyers are willing to pay top dollar because we also look at what can buyers cut. We are selling a manufacturing business that has a distribution center that’s cost them a million a year. This manufacturing company, the buyer, has distribution all over the US. They can cut that million dollars a year distribution center because they don’t need it. That increased their EBITDA. We always look at those angles.

Those synergies.

Plus, they take advantage of economies of scale.

Such as?

Such as purchasing power. The more a franchisor, the more franchisees that they have, and the more that they can buy at a lower cost when they are buying food or any type of inventory.

It’s like the big supermarkets. They work on that premise because they are buying so much. That’s the fourth P, Proprietary assets, and there’s a lot in that as well, which leads us to number five.

This is Patrons. Patrons are your customer base. In the United States, the Golden Rule is that 80% of your revenue comes from 20% of your clients. The problem with that is losing a couple of clients, and you are in big trouble. We are still in an advertising marketing company for $10 million. They only have 5 clients but had 5 casinos. They were doing business with big-time casinos and lost two while we were trying to sell them. They were no longer sellable because the revenues dropped in half but we merged them with another media company.

Was that successful?

It was but because you have customer concentration doesn’t mean it’s not sellable. It’s much more difficult. We sold all manufacturing business that was appraised for $9.8 million. We have 550 buyers. We narrowed it down to twelve letters of intent. They had a 65% contract with VP, so 65% of their revenue was tapped into VP. If they lose VP, they are in big trouble.

Most of my buyers were very concerned about that risk. I found a strategic who had some of our products in similar services that had been trying to get into VP for decades and could never get in. His thought process was, “I buy VP, I’m in the door. They have to take my other products and services.” He paid $15 million for 70% of the company when it was appraised at $9.8 million. It’s 126% more than the appraised price.

That will be a happy founder for sure, so that takes us to number six.

It’s Profits. The most important thing to all entrepreneurs is profits. I put profits last because you will never be profitable if you haven’t figured out all these other five Ps. If you are not running in all these other five Ps and operating all of them, you won’t be profitable. I have clients that come to me and say, “Michelle, I have a profit problem.” I’m like, “No, you have a people problem. You have a process problem.” Lack of profits is never the problem. It’s always the symptom of.

That’s almost at the end of the funnel. If you don’t get the other Ps right, then there are no profits coming at the end of the funnel.

You could have a lot of business coming in. I partnered with a graphics company that turned down 6,000 clients a year.

Turning down?

They had no problem getting the business. The problem is that they had a problem fulfilling the orders because they didn’t have people and processes. They had husband and wife and one employee trying to do all these orders. It’s a graphics company, and they didn’t have the people and the processes, so they were turning down business. I ended up partnering with them.

This is a jam-packed episode, which I love, and I’m only ever scratching the surface when I talk to great people. It’s kind of you to join me on this. How can people get ahold of you if they want to know more or if you’ve whetted their appetite to say, “I need to start thinking about these things?”

I would say two things, number one, they need to get Exit Rich now.

Where can they get that?

I would get it at ExitRichBook.com. You can get them on Amazon but all the goodies and values are at the website. We are in pre-sale. The book launch day is in June. You don’t have to wait until June. You can go to the website now and order the book for $24.79, which is less than Amazon. We will email you the digital download, so you can start reading the book now. We will mail the hard cover to your doorstep. Plus, we will give you a lifetime membership into the Exit Rich Book Club where we have video content, video training and documents.

Documents to operate your business like employee handbooks, non-competes, organizational charts, documents to run your company, sell your company, sample letter of intent, sample purchase agreement, sample due diligence checklist, and sample closing documents. These documents are there for your review and your download. I’m telling you, these are worth more probably between $25,000 to $30,000, to recreate all these documents.

There it is. It’s a ready resource for people when they can start to think about exiting their business before a catastrophic event.

We are also giving them 30 days of a free membership into Club CEOs, which is an entrepreneur mastermind where we ask those transformational questions and help business owners. It’s not just about exiting but also we help business owners build a sustainable business that’s scalable. When you are ready, you do have something that’s sellable.

If people wanted to connect with you, what’s the best way for that?

They can text Michelle at (888) 526-5750. All my social media websites pop up so they can follow me and connect with me on LinkedIn, and my main website is SeilerTucker.com.

Look how organized you are. It’s marvelous. Now you are a friend of the Leadership Enigma, which is great. It has been fabulous to talk to you but I wanted to say to you thank you so much for being a fab guest on the Leadership Enigma. I hope maybe you will think about coming back to us and telling us a little bit more about what it’s like selling businesses and working with all of these leaders and founders when the world isn’t quite as bonkers as it is. Would you do that for us?

Absolutely. I would love to come back. Thank you so much for having me.

Michelle, you are a superstar. Thank you very much.

Important Links

• Sell Your Business For More Than It’s Worth
• ExitRichBook.com
• Amazon – Exit Rich
• Six Ps
• ST GPS Exit Model
• Club CEOs
• LinkedIn – Michelle Seiler Tucker