Your business is your most valuable asset, and you should know how to scale it successfully or exit from it gracefully. Unfortunately, most entrepreneurs find themselves managing a business that does not allow them to enjoy their lives or achieve financial freedom. Michelle Seiler Tucker discusses three important things to consider to build an exit-ready business. Learn why you should hire people smarter than you, keep an eye on ever-changing market trends, and accept the truth that you will not be running your business forever.

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Why Your Business Is Your Most Valuable Asset

I have been in the mergers and acquisitions industry for over 26 years, specializing in buying, selling, fixing, and growing businesses. My most recent book, Exit Rich, endorsed by Steve Forbes, is a Wall Street Journal and USA Today bestseller. It is really crazy to think that there are over 30.8 million businesses in the United States, 99% of them being small businesses.

When you think about over 30 million businesses, how many are up for sale every year? How many actually do sell? The numbers are frightening if you are a business owner, especially if you are a baby boomer. The reason that these statistics are so startling is that most baby boomers have poured their heart, their energy, and sweat equity into their business.

They have made huge sacrifices. I talk to business owners all the time who say, “Look, I created my business. I started my business. I bought a business for financial freedom, for a better quality of life.” Unfortunately, that is not always true because many business owners tell me, “Michelle, this business really pays the bills,” or even worse than that, “I have not taken a vacation in years. I have missed all my kids’ soccer games. I missed all my daughters’ dance recitals.” Business owners really have not built a business that works for them.

What they have really done is create a job that they go to work at every day, calling it a glorified business. I am probably talking to you right now, and it is sad but true. The reason that is so sad is that entrepreneurs should be enjoying their lives. They should be going on vacation, and they should spend more time with their family. They should have a better quality of life and financial freedom, but they do not.

You really have to ask, “Why is that?” The biggest reason is that business owners really are the business. As I said earlier, they have created themselves a job that they go to work at, versus a business that works for them. A lot of business owners think, “If I want them right, I have to do it myself.” That cannot be further from the truth. What you have done is built a business around you rather than a business that works for you.

Hire People Who Are Much Smarter Than You

Business owners and entrepreneurs actually really have to get clear and say, “Look, if I want to grow, I have to let go of the control.” I really have to learn to delegate. I have to take inventory of what my strengths are and what my weaknesses are, and hire people smarter than me. Some of the most successful people in the world hire people who are much smarter than them.

Most business owners think, “If I want a successful business, I have to do everything myself.” Business owners and entrepreneurs, let us face it, we are control freaks. Me too, I am in the bucket with you. We are control freaks. We always think we have to do it ourselves. Therefore, entrepreneurs and business owners have their hands in every pot. They are the ones who have the sales relationships. They are in charge of marketing.

They are the ones who talk to each department. They are the ones who have to approve every single decision. Nothing can get by without the business owner overseeing absolutely every detail in the business. You will never grow like that. You will never grow unless you figure out how to let go of control. To grow, you have to let go of control. You have to delegate.

Some of the biggest successful owners in the world delegate. Steve Jobs did not do everything himself. He delegated. Think about Jeff Bezos, who started Amazon. Jeff Bezos absolutely does not oversee every single detail. Maybe he did in the beginning, but Jeff Bezos and Steve Jobs all learned how to really delegate and take inventory of what their strengths and weaknesses are. When they take inventory of what their strengths and weaknesses are, they hire for their weaknesses.

Many owners do not want to hire somebody smarter than themselves because they get scared. They are like, “I cannot hire somebody smarter than me,” so they do not. If you do not hire somebody smarter than you who has the skill sets that you do not possess, you will never really grow your company. This is very important to really start focusing on building a business that is sustainable, scalable, and can run without you.

Most businesses are not sellable. Going back to the 30 million-plus businesses in the United States, 8 out of 10 never sell. It is really because they are not sellable. The business owners created a job. Buyers do not buy jobs. Buyers buy businesses that can run without the owner because buyers do not want to go to work and really get involved in the day-to-day. Buyers want a business that will run without them.

Sellers have built themselves a job, and buyers are not interested. That is one of the number one reasons why businesses never ever sell. Eight out of 10 businesses do not sell because they have never built a solid foundation. They have not built a business that will run without them. Most of these owners, as I said before, have never taken a vacation and have missed all their children’s activities. That is not what we go into business for. You really have to stop and think about that.

Plan Your Exit From The Get-Go

How do I build a sustainable, scalable business that is sellable? The other biggest reason that eight out of 10 businesses will not sell is that business owners do not plan their exit, their GPS exit that we have talked about on the last episode. They do not think about selling until a catastrophic event has occurred. They do not really give it any thought whatsoever until they wake up one day and go, “Poof, I am burned out. I am exhausted. I cannot continue to run this business. I cannot deal with employees. I cannot deal with the AI and software changes. I just cannot deal.”

They want to sell the business. They want to sell it for 10, 15, or 20 million dollars. Guess what? They never did a business evaluation. They never actually found out what their business is worth. They want to sell it for 10, 15, or 20 million dollars, but they do not know what it is worth. Business owners really think about their business, and they think, “If I am going to sell my business, what do I need?”

They do not think about value. They do not think about what the business is worth to a buyer. They think about, “What do I need to walk away and retire on?” They think about, “What do I need to leave and start my next masterpiece?” Really, what they should be thinking about is, “What is the value that my business will bring a first-time buyer or strategic buyer?” What is the value that it will bring to a strategic buyer that will catapult their business to the next level?

Buyers do not care about what you need. They do not really give a crap. Buyers care about the value that your business brings to them. It is really important to know the value of your most valuable asset, which is your business. It really cracks me up because entrepreneurs will go to the doctor once a year. We want to make sure that our heart is still ticking and our body is still clicking. We want to make sure that we are in good health.

We will take our cars to a mechanic once a year, get an alignment, and make sure the car is working in all cylinders. We think about our most valuable asset, which is our business. Most owners do not think about it that way. They think about it as, “Here is a job I am going to work at,” or “Here is a business that I own.”

They never really look at it, take stock, and go, “This is a valuable asset. This is worth more than my financial portfolio. This is worth more than my house. This is worth more than all my possessions.” You leave everything to chance. You do not leave your health to chance. You make sure you get that one-year physical checkup. You do not leave your car to chance. You make sure you get a tune-up.

You take your business, which might or might not be running on all six cylinders, and you never get evaluated until you wake up one day and say, “I have to sell my company.” You have no idea whatsoever what it is worth. It is not worth what you need. It is worth the value that it brings to the buyer. That is financial suicide when you do not get an annual valuation checkup to know what your business is worth today.

If you said, “I want to sell my business today,” I really want you to think about that. If I were to walk in and say, “I want to buy your business, I am going to give you an offer,” and I make you a really great offer, can you accept it today? Will you accept it today? Will you take my offer? In many cases, most owners say yes, that is a great offer, let me sell you the business.

In most cases, an owner says, “I would love to take that offer, but I cannot take that offer now because my business is not sellable. It is me.” Maybe I want to keep working for the company, or maybe I want to exit and finally travel the world because your business is not sell-ready. It is not Exit Rich ready. You really need to build that Exit Rich-ready business. It is one of the most important things you will ever do in your life. That is why 8 out of 10 businesses do not sell when everybody takes a business for granted, does not realize it is our most valuable possession, puts everything else in front of it, and does not focus on what I want to sell my company for, what is my destination?

$20 million. What is my business worth today? $15 million. What is my timeframe? Three to five years. Can the business run without me? What are the buyers looking for? What are the KPIs? If you cannot answer all of that, my friends, you do not have a sellable company. You really have to do some soul searching and some internal research, and really focus on your business. What are your objectives? What do you want to do with your business? What is your vision? You are not going to run your business forever.

When entrepreneurs think, “I do not think about selling because I do not want to sell. I love their business. I’m passionate about my business. I love what I do. I do not want to sell it.” I will tell you that that is not a wise decision. That is not prudent at all. I talked to a gentleman. He says, “I never think about selling my business because I do not want to sell my business. I will just run it forever.”

Nobody just runs their business forever anymore. That is unrealistic. “I will gift it to my kids or sell it to my kids.” That is also unrealistic. Your kids do not want your business. Your kids have seen you work really hard. They have seen you bring work home. They have seen you miss their events. Some kids grew up in your business and said, “I can never do this.” Less than 5% of generational equity, where companies are passed from generation to generation, actually ever comes to fruition anymore. It used to be a high number. 60%, 70%, or 80% of companies would pass on to the next generation.

This does not happen anymore. Kids do not want your business. You really have to think about what my vision is for my company. You are not going to live forever. Catastrophic events occur. COVID occurred. Financial debacles occur. Health issues happen. Partner disputes happen. Divorce happens. There is a 51% divorce rate in our country. You really have to start thinking about that exit.

Keep An Eye On Changing Market Trends

Timing is everything. You cannot just wake up one day and say, “I want to sell my company.” When you are ready to sell your company, you also have to look at the market. What are the market trends? Owners are typically buried in their business. They are buried in the day-to-day. I call entrepreneurs firefighters because they are always putting out fires in their business. They have blinders on.

They most often do not look at external factors. They do not look at the competition. We have a brand new competition. We never knew it. This happened to a lot of small businesses when Walmart came in. This happened to a lot of small businesses when Sam’s Club came in, when Costco came in, and when Amazon started selling everything. I do mean everything.

It puts so many small businesses out of business. Again, business owners are so busy working in their business that they are not looking at market trends. What is the best time to build? What is the best time to go to market? Number one, you have to build that sustainable, scalable, sellable business that can run without you. Number two, you have to time it with the market. Nothing stays the same. That is what happens to a lot of baby boomers.

A lot of baby boomers say, “Look, I want to keep running my business as I always have.” In business and in life, you are either growing or dying. There is really no in-between. Many business owners get so stuck in their business that they forget about their aim. Most business owners have a lack of aim. What does aim mean, you ask? It means to always innovate and market. Always innovate and market. If you are not innovating, if you are not marketing, your business is dead.

When I say take that sustainable, scalable, sellable business, align it with the marketplace, and keep your eyes on the prize. Make sure that you are studying market trends. Make sure you are looking around your industry and see who has popped up, because competition pops up every single day. A lot of times, competition comes in a big way, like Sam’s Club did, or like Amazon did. They are very well funded, and they have a ton of money.

Discussion Wrap-up And Closing Words

They have a tremendous amount of money for working capital. They can put businesses out, and they do put businesses out overnight. You also have to look at what the economy looks like. What are interest rates? There are fewer buyers when the interest rates are not there. There are fewer buyers when the economy is not doing well. There are a lot of things that you have to consider in the marketplace to know when to sell your business. What is the perfect time?

If you have perfect market conditions and your business is not ready to sell, you are losing out on a huge opportunity to cash out and exit rich. These are things I encourage you to really think about and really become alert and observant. Look around at what is happening. It does not mean you cannot sell your business if the market is not ideal or perfect, but it makes it much more difficult, and there are a lot fewer buyers.

When the real estate market is hot because of economic conditions and outside factors, everybody starts putting a house on the market, and then there are buyers. It is a seller’s market, and sellers are selling for a lot higher price. Think about when COVID ended. Everybody wanted to buy a house. It was a seller’s dream market. It was not a buyer’s market.

Right now, because of market conditions and because of interest rates, it is a buyer’s market, not a seller’s market. When the market conditions are right, and everybody wants to go buy a house or sell a house, why doesn’t anybody think about, “Market conditions are really good right now, let me put my business on the market. This is the perfect time for external factors to sell my company.”

They do not think about that. When market conditions are perfect for a buyer and in their favor, they are going to run out to buy houses. Same thing with businesses, but business owners do not think about it because they are too buried in the day-to-day operations. When market conditions are perfect, your business probably is not. What is really important to do is to focus on what you want to sell your business for. Make sure you get a business evaluation.

You should have an annual business valuation checkup and build a sustainable, scalable business that is sellable when market conditions align. That is what you should be doing. Next time, we are really going to dive into the foundation of your business and how you need to build that solid foundation, so when you are ready, your business is ready to sell. Thank you for tuning into another episode of the show. Please share this information with your friends and your colleagues. Please share this with your network. I always say, “Your network equals your net worth.” Get it out there, and also make sure you subscribe to the show. Thank you. Until next time.

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