Are You Ready To Exit?
Are You Ready To Exit?
Welcome to another week of building... As summer is now in full swing, some start to slow down. For me, it feels like travel is ramping up and opportunities are budding.
Spent most of the week on the road in NYC and college campuses...
Both have one big thing in common - ENERGY
The older I get, I find it more important than ever to stay around the young people. Why?
Two reasons:
- 1. To remind myself of this world’s endless possibilities
- 2. To break limits that I’ve artificially placed on myself from my garbage not realizing that its just crap (remove and breakthrough).
But, us OGs should fear not... The wisdom, experience, and lessons we've learned over the years is also highly valuable to the young guns... We've just got to meet each other where we are (that's the hard part).
If you're new here, this is my weekly newsletter where I reflect on the lessons, events, and inside scoop of being a husband, dad, and business builder...
In Today's Blog:
- Wins/Lessons/Thoughts from the week
- Are You Ready to Exit?
- Weekly Take-Away: 👉 NYC is On FIRE 🔥 👈
Weekly Wins/Lessons/Thoughts from the week:
- • We go through hard stuff on this journey of entrepreneurship. Remember to remind yourself why you started this journey and what you’re chasing. The power to keep going is hidden in those answers.
- • Two things I saw in action this week that I’ve under-rated: The importance of hiring and idea/business selection. The top of the top are HIGHLY selective in WHO and WHAT they surround themselves with.
- • The best of the best are surrounding themselves with OTHERS that inspire, encourage, and motivate them. There are communities of people out there accelerating careers. If you don’t have a community, I encourage you to find one.
As I write this, I guess this week is mostly about thoughts vs wins/lessons. NYC was an inspiration to me b/c I spent time seeing others in action and just people watching/thinking in the evenings. Opening my mind and gave me a renewed sense of WE GOT WORK TO DO.
Are You Ready to Exit?
If you ask this question to the VC (Venture Capital), PE (Private Equity), or Investor community, here's what they'll likely tell you:
Exiting a business/investment is based on market timing, growth trajectory, and targeted return on investments.
But, what if you ask Mike who runs a successful business doing $3 million in EBITDA (just a fancy term for profit before a bunch of add-backs) and employs 74 people?
Mike may one day want to retire, but Mike may not know how to exit his business.
I've met some Mike's who simply will decide its time, turn off the lights, lock the door, and walk into the sunset.
I was Mike...
What I've learned about launching, building, and exiting businesses is that we can not predict anything. We never know when a buyer will come knocking or we'll need to exit rapidly.
What would I tell my younger self or any business owner, venture builder, or entrepreneur?
Always be ready to exit.
Ok, cool... So how do YOU prepare your mind and business to be ready to exit?
Here are a few steps:
1. Understand Your Business Valuation:
Typical manufacturing businesses will sale for a multiple of EBITDA. Think 1-3X for smaller businesses and 4-8x for more established, bigger, businesses with a whole bunch of variables.
SaaS businesses will often trade on a multiple of revenue and the market can fluctuate between 5-20X.
Lots of factors and lots of PROs out there to help.
2. Maintain Clean Financial Records:
We all know this, but it can be hard to do when you (1) don't know what you're doing and (2) get busy.
Hire a rockstar to help early. I outsource in the beginning and bring on talent when ready. This will change your world.
• Document Key Processes:
I call these "PLAYBOOKS". I grew to hate "processes" or "procedures" for some reason. Maybe because those words feel confining.
Document EVERYTHING.
I met a team this week, who is ROCKSTAR A+ at this.
Document, review, revise CONTINUOUSLY...
I even do this with my operators. It's the unlock to freedom and growth.
• Identify Potential Buyers:
I talk a lot about the differences in PE, VC, Investor, etc. Just know there are options.
• Prepare Legal and Compliance Matters:
I'd put this in processes, but its never too early to start a data room (or digital filing cabinet) that is well organized with all your legal docs.
• Have FUN
Remember, "No Bad Days"! We signed up for this so enjoy the ride and never stop learning, growing, or trying....
Weekly Take-Away: 👉 NYC is On FIRE 🔥 👈
I'm running out of time and need to go for a quick workout and then all day rooting for girls at LAX and basketball, but I LOVE NYC.
Thank you for being here this week.
More travel on the docket for the next few weeks, so should be an exciting month.
Till next week, keep rocking it...
You Got This,
Andy
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