Exit Rich Times # 6

Most business owners believe buyers start by looking at revenue and profits.

They don’t.

After more than 26 years of buying, selling, fixing, and growing businesses, I can tell you that sophisticated buyers ask a different question first:

“Who is running this business?”

Before buyers analyze financial statements, EBITDA, or growth projections, they evaluate the team behind the company.

Why?

Because profits can disappear.

People create profits.

And if the right people aren’t in place, today’s profits may not exist tomorrow.

That’s why People is the first P in the ST 6 P Method®.

Without the right people in the right seats, sustainable growth becomes difficult, scalability becomes nearly impossible, and sellability suffers.

The Mistake Most Owners Make

Many entrepreneurs build businesses around themselves.

They approve every decision.

They manage every department.

They maintain every major customer relationship.

They solve every operational issue.

They become the rainmaker, the manager, the problem solver, and the visionary all at once.

At first, this feels like leadership.

To a buyer, it looks like risk.

When a business depends on one person, buyers immediately start discounting value.

Because the moment that owner leaves, uncertainty enters the equation.

The question becomes:

Will the business continue to perform without them?

If the answer is unclear, the valuation suffers.

Why Buyers Look at People First

When buyers acquire a company, they’re not simply purchasing historical profits.

They’re investing in future performance.

Future performance is driven by people.

A strong leadership team creates confidence.

A weak leadership team creates concern.

That’s why buyers often spend significant time evaluating:

• Leadership depth
• Employee retention
• Organizational structure
• Management succession
• Key employee dependencies
• Company culture

The strongest businesses are not built around one person.

They’re built around great teams.

The Companies That Understand This

Some of the most successful companies in the world have long understood that investing in people creates long-term value.

Costco

Costco is known for paying employees well above industry averages while providing strong benefits and opportunities for advancement.

Many competitors focused on reducing labor costs.

Costco focused on reducing turnover.

The result was a more experienced workforce, stronger customer service, greater consistency, and a brand customers trust.

Their investment in people became a competitive advantage.

Chick-fil-A

Chick-fil-A doesn’t simply hire employees.

They develop leaders.

The company invests heavily in culture, training, and operator development.

As a result, customers receive a remarkably consistent experience regardless of location.

Consistency creates loyalty.

Loyalty creates predictable revenue.

Predictable revenue creates enterprise value.

Southwest Airlines

For decades, Southwest differentiated itself through culture and employee engagement.

While competitors focused solely on operational efficiency, Southwest focused on building a team that genuinely cared about customers.

That culture became one of the company’s greatest assets.

And assets drive value.

The Exit Rich Perspective

One of the biggest misconceptions business owners have is believing profits alone determine valuation.

If that were true, every company with similar profits would sell for the same multiple.

They don’t.

The difference is often found in the quality of the team.

A business with strong leadership, documented responsibilities, and a management structure that operates independently of the owner will almost always command a higher multiple than a business where everything flows through one person.

Buyers are not looking for jobs.

They’re looking for businesses.

And businesses require people.

The Ultimate Test

Ask yourself one question:

If you disappeared for six months, what would happen to your business?

Would revenue continue?

Would operations continue?

Would customer relationships remain intact?

Would employees know exactly what to do?

Or would everything stop?

The answer reveals the strength of your People P.

Build the Team. Build the Value.

Many business owners spend years trying to increase profits.

Few spend enough time building leadership.

Yet leadership is often what determines whether profits are sustainable.

The highest-valued companies understand this.

They identify talent.

Develop leaders.

Delegate responsibility.

Create accountability.

And build organizations that can thrive without the founder’s daily involvement.

Because at the end of the day, buyers don’t invest in spreadsheets.

They invest in people who can continue producing results long after the owner has moved on.

And that’s why buyers invest in people before they invest in profits.