Whether you want to sell your business or not, structuring it in a way that it could be sold is the best way to build a business. Join us with our personal coach, Eric Beck of Founders Fire, as he teaches the path to building a business with a clear exit strategy.
In this episode, we dissect the essence of stewardship and the benefits of intentional scaling and introduce you to Eric's Entrepreneur Classic challenge that will help you simplify and amplify your business's value.
Navigating the complexities of preparing your business for sale or succession is no small feat; it demands strategic timing, astute decision-making, and a thorough understanding of your company's value. In this conversation, we delve into the resources at your disposal, from determining the right moment to sell to implementing systems that attract potential buyers.
Our discussion isn't just about profits; it's about aligning your business with kingdom principles that not only enhance its market value but also smooth the transition to new ownership. Discover how the impending retirement of baby boomers opens doors for market consolidation and what performance-based pay and priority workflow management could mean for your business's future.
We strongly urge you to sign up for Eric's challenge, as it will equip you to structure your business with a clear exit strategy. To register, click HERE.
Whether you want to sell your business or not, structuring it in a way that it could be sold is the best way to build a business. Join us with our personal coach, Eric Beck of Founders Fire, as he teaches the path to building a business with a clear exit strategy.
In this episode, we dissect the essence of stewardship and the benefits of intentional scaling and introduce you to Eric's Entrepreneur Classic challenge that will help you simplify and amplify your business's value.
Navigating the complexities of preparing your business for sale or succession is no small feat; it demands strategic timing, astute decision-making, and a thorough understanding of your company's value. In this conversation, we delve into the resources at your disposal, from determining the right moment to sell to implementing systems that attract potential buyers.
Our discussion isn't just about profits; it's about aligning your business with kingdom principles that not only enhance its market value but also smooth the transition to new ownership. Discover how the impending retirement of baby boomers opens doors for market consolidation and what performance-based pay and priority workflow management could mean for your business's future.
We strongly urge you to sign up for Eric's challenge, as it will equip you to structure your business with a clear exit strategy. To register, click HERE.
Today we're talking with Eric Beck out of Colorado, which he got snowed in last week of all things, which is crazy. I'm so thankful we live in Charlotte, North Carolina. This is David. I have dropped Jason to make sure that I can have Eric on this podcast with me. I'm just so thankful that we can have Eric on because we want to talk about how to build your business to sell it.
Speaker 1:Now, whether you want to sell it or not, that doesn't matter. You want to build it to sell it because that is the best stewardship of your business that you can possibly do before God. Jason and I, when we built our first company about three years in, we were doing very well and we read this book, E-Myth. And then we read another book, E-Myth, Revisited by Michael Gerber, and Michael Gerber said he's an absolute genius business guru. He said you want to build every business that you do. You want to build it to change the world and you want to build it to sell. Whether you sell it or not, whether you change the world or not, that's how you want to build it. So, Jason and I, we jumped in and we started building it to sell it. We built it, we scaled it 100 offices, 35 states, and we actually received some training.
Speaker 1:We had no idea that Michael Gerber's right-hand man to help launch his global training platform was Eric Dadgum Beck, who happens to be a personal friend of ours. Now he is our business coach, our mentor, a very close friend of ours, and he owns a company called Founders Fire where he helps companies systematize, organize and steward their business for kingdom advancement and also to sell it, if you want. And Eric has a three-day challenge that's coming up, called the Entrepreneur Classic, a three-day freedom challenge to simplify your business, multiply your company value and sell at top dollar or put it on cruise control. Now, if you're anything like me, that excites me and I want to be a part of that. So, Eric, welcome back to Expert Ownership. Most of the people listening to this podcast have heard you before, so welcome back.
Speaker 2:Oh, David, thank you so much. It's great to be here. Great to be here.
Speaker 1:Eric, tell us why. First of all, I want to talk about that challenge, but before we do take us back a little bit, why do I want to build my business to sell Like?
Speaker 2:what's this thing about? Taking ground for the kingdom and all that stuff Run with it. Yeah, man, yeah. Well, first of all, most people who start small businesses are not entrepreneurs in the classical sense. They don't have a huge private equity fund that they're going to use to find opportunities and buy and sell and do all this kind of stuff. They are back to Michael Gerber technicians suffering from an entrepreneurial seizure. They're working in a mechanic shop or a dry cleaners or a bakery or a restaurant or a law firm and they say, dadgummit, I could do this better. I think I should do this. I think I need to not do it this way.
Speaker 2:It's my story, I know it's to some extent, it's you and Jason's story to say, hey, wait a minute, this is something that I need to move forward in and whatever is the motivation, ultimately it is a real step of faith Because, as good technical, hardworking head down know how to do the details, people, that's not everything that's required. You know there's a lot more to building and running a business and so when people launch out into that, you know they find themselves overwhelmed with the details. Everything depends on them and that's usually the starting place. I think what Mike was getting at was he was saying you know kind of that, stephen Covey, begin with the end in mind. If you just launch out to get out from the man, that may not be enough. And I just want to say I don't think he meant it this way, but you and I mean it this way.
Speaker 2:That is the story of salvation. If you look at the nation of Israel, they start off in bondage, doing what Slaving for the man, and then Moses leads them out of that slavery into freedom. But that's a wilderness where they've got to get organized and then finally, when they're organized, they can move into the promised land and we can see the growth. That's the model, I think, for us in small businesses, entrepreneurs to say it's not enough to just get out of slavery to escape Pharaoh and Egypt, because that's what happens A lot of us do, and we land in the wilderness and we're like what do I do now do?
Speaker 1:And we land in the wilderness and we're like what do I do now? For those of you not familiar with that story, in Exodus, chapter 18, moses's father-in-law, jethro, came and he gave Moses some amazing advice and he basically said, and I'm paraphrasing systematize this group of people so you guys can function effectively. And it's the same way with our business. Systematize it so you can function effectively. Eb, I want you our business. Systematize it so you can function effectively. Eb, I want you to give some practical advice. Let me just throw a couple out there. A guy who is looking at possibly buying a print shop and they've got five employees but not a lot of systems. But he wants to go ahead and buy this thing and systematize it. Or he's already got an existing business. He's a contractor. He might have one employee that just acts kind of more as an everything guy, but he wants to build and scale and expand. So he's got to systematize it. What are some of the steps that they can take to get them organized?
Speaker 2:Well, I would say head over to Exodus 18 immediately. Really, that chapter, almost every single verse in it, is the handbook for business development, for organizational development. Really, jethro starts off by saying to Moses what you're doing isn't good. And that's that word of the Lord that we don't want to hear. He's like man, I just got out of Egypt, I'm free, I'm my own man, I'm my own boss. Now, you know, I'm out here doing it.
Speaker 2:And Jethro shows up and it's like this is not good. And it's not good because we all have a tendency to start and then stop and that consistency that day in and day out, you know, authorized work, what we're supposed to be doing with the Lord is not maintaining. I love that in the movie Patton, you know there's a quote in there. He was like you know, I don't want to get any messages saying we're holding our position, we're not holding anything, we're going to let the Germans hold and we're going to be constantly advancing. There's a little more colorful language in that. So our mindset cannot be to just get out and then hold on, it's got to be to keep advancing. And if I'm a contractor and I've got a couple of employees and things are going pretty good. I'm right in this Jethro moment where I've got to start systemizing, and the best way to do that is to start with Habakkuk 2.2, which is to get that vision out of your head, out of your heart, and get it onto paper.
Speaker 2:Now a lot of people are like, yeah, vision, blah, blah, blah. But the reality is, the most important system you will ever work on is clarifying the vision, because without vision, people die. Without vision, people don't have discipline. Without vision, people go in circles, and that's what we're seeing in modern culture right now. There is no vision of the future, there is no vision of how people are developing and growing, and so people are just in circles and chaos. That happens, of course, in the small business as well, because everything swarms around that owner and it's always asked you know if the owner is Ed, ask Ed, what about this Ed? Hey, ed, what about this? And that's exactly when Jethro shows up and says you're wearing yourself out. This is not good.
Speaker 1:It becomes Ed dependent instead of systems. Okay, so now you got the Habakkuk 2, you write the vision. You've got it down. What's the next few steps?
Speaker 2:Well, the next thing and not to sound self-serving here, but it really you need to get an assessment, you need an MRI of where you are, and probably you guys have all heard about the flagship assessment that we offer. That tool will help you know where you're at in terms of performance, systemization, scalability and strategic alignment with your vision. So it's kind of like a where we are and the vision is where we want to go. Closing the gap in a certain order is the business development work. So it goes vision and MRI of where you are. And now we want to take each of those 12 areas and ask is this area performing, measurably performing, let's say, sales? And if it's not, what would have made me say yes? And then, how do I systemize that yes? How would I build a little system that's going to get me that yes? What person is going to run that system for me? And finally, how do I hold that person accountable and reward them? So accountability and reward are two sides of the same coin. You know, if we can't measure it, we can't manage it, jack Welch, we all know that. So ultimately, that's that piece that we're getting to with the systems, and now what we're starting to do is take Jethro's advice, putting people over the thousands and the hundreds and the fifties and the ten.
Speaker 2:And it's interesting because he says select capable men from among all the people, men who fear God, trustworthy men who hate dishonest gain. That's the other side of systems. That again, not to kick my playpen, because I love my time at E-Myth, but one. If I'd add something to that, you know I'd add what about the people though? Yeah, the systems, but we got to have a. We need a good race car, but we need a good race car driver. And right there Jethro is saying it Find people who can operate those systems. And what I have found is because everyone listening to this is saying yeah, that sounds great, eric, where are those people? I just want to respectfully raise my hand and say if you haven't already built the systems, why would God trust you with a person of that quality? Don't wait for the person. You build the ark now. God will send the flood.
Speaker 1:That's right. So, eric, tell us about this entrepreneur classic. I mean, let me read the title again. I love it. Three Day Freedom Challenge. Like as soon as I hear freedom, first thing I think of is William Wallace with the blue plate stain on shouting freedom at the English when he was fighting for Scotland. But freedom from business. You want to be on your business, not just trapped in it. It says this you want to simplify your business, multiply your company value, sell at top dollar or put on cruise control. I would like to do all of that. So what are we going to learn? What does this tell us about this three-day challenge?
Speaker 2:Absolutely. You know, really the heart of it is that when we take ground by owning a small business, I just want everyone spiritually, it's grounded, spiritually, it's not just finding an opportunity hey, there's not too many car washes around here, I'm going to start a car wash. That's okay, but spiritually it is. There's a group of people that could be served with kingdom ethics, kingdom mentality, kingdom honesty, kingdom value creation. That's what needs to happen. Where is the opportunity to do that? Okay, it's in this car wash, or it's in this dentist's office or wherever it is. That's the thinking, is okay, that ground needs to be taken, just like Moses was going to go into the promised land and Caleb and Joshua were like yes, let's take it. So that's the mentality yes, let's take it, we're going to go in there and steward it. Now the main event is that, if we are stewarding that ground, the question is is that where we land and stay and put down our roots, or is it like Paul, where we establish an enclave, an outpost, and we move to another one? Both of those are yeses. The question is, what's God asking you to do? So what we're going to do is help you determine. How do I know if I even should sell. You know how do I know if that's the right thing for me? The second thing we're going to go into is how do I get something that's sellable and that's a larger question, and we talk more about that in a second. But ultimately we're going to make sure that you see that you don't only have the opportunity to sell or run it. You have another opportunity and that opportunity is coming in spades in the next couple of years and if you're ready for it, it's going to be huge. About 1,000 baby boomers a day are retiring. Some people will say up to 4,000 or 5,000 a day, but let's be conservative. About 1,000 baby boomers every day are retiring and approximately 6% of them own a small business. What is going to happen as they say hey, I am done with this territory, I have stewarded this territory. I need to find. What did Jethro say? A righteous person who hates dishonest gain and is trustworthy. You have the day three night. Three of these three, it's three nights in a row Tuesday, Wednesday, Thursday. The third night is going to be how to buy up your market. How do you actually do what we call in the business a consolidation or a pull-up? Exactly, Huge opportunities and we're even going to introduce you to people who can fund some of this.
Speaker 2:So on both sides of the equation, I want to get my business ready to sell, but I may not wind up selling it. Perfectly, fine, I may sell it. Why would you sell it and is it really sellable? I may sell it. Why would you sell it and is it really sellable If it's not systemized? We know you're going to get I'll just tell you now a two or three multiple on EBITDA. You could just use revenue as an easy number what's your revenue, Multiply it by three. That's probably what you'll get, and what that means if you're 50 is that when you're 53, you need a job. You did not monetize your business. You kind of abandoned it, and you should not do that If you're not going to get a seven, eight, nine. I've had a client that I helped sell his business. He got an 11 multiple and the sole reason was because he had systemized in this way that we're talking about what we do at Founders Fire and what you guys do at Expert Ownership.
Speaker 1:Hey, eric, explain real quick and I'm putting you on the spot here. You were working with somebody and this was several years ago and I remember you telling this to Jason and me yeah, you helped systemize this business and when the purchaser actually saw the systemization, the multiple exploded. Give us a couple of that again.
Speaker 2:Yeah, that's exactly right. Yeah, that's exactly right. So, again, I don't want to present it as a panacea, because it needs to be in a desirable market and all that work needs to be done Right time. I'm talking roles, I'm talking goals, I'm talking jobs, all the way to value creation. Anchor activities, daily priorities, kpis I mean top to bottom, automated, if that's true for one business and the other business in the same market with the same amount of revenue, is frankly just ed.
Speaker 2:Dependence is owner centered. It's a no brainer. Not only will the systemized business get a huge multiple, it's possible the other business won't sell. Private equity is getting more and more picky as they go and I know it sounds harsh, but they will let a business get into bankruptcy or near bankruptcy and keep them in mind, and that's all they'll say. Well, yeah, we'll keep you in mind. You know, thanks, it's not a fit right now, but we'll keep you in mind. What they really mean is you're not systemized very well and so we're probably going to let you get to fire sales status so we can come in and buy it for cheap.
Speaker 2:And again, I think from a kingdom standpoint that's a lose. I mean, if you have to do it. You do have to do it, but in general we don't want to go that way because, like you were saying earlier, if we take the roles that everyone's in, we build up those anchor activities. We have a software that automates this, called Spartacus, that automates everyone's role, everyone's accountability, performance-based pay. That was a head-turner because, again, a lot of people have some degree of systems but they think that it's SOPs and documents. That's not systems. That's documentation. It is important, but it's not what people use on a daily basis. What we're talking about is living, breathing, priority workflow management. If that then ties into performance-based pay, these purchasers out there are very interested because they start to see now the alignment of motivation has been conquered and that's really been the challenge in business, I'd say, for the last 150 years is labor versus management and leave it to God to come into the equation and go. Guys, you're doing it wrong. That it's not a battle, it's not labor versus management. Management wants as much work for as little pay as possible and labor wants as much pay for as little work as possible. Not kingdom, not kingdom. Kingdom is we're all aligned, we all grow together.
Speaker 2:And again, these private equity guys and investors that are looking to buy these businesses. They're looking for ease of operation. Can you prove to me it will run without you easily? And we say, yeah, compared to our competitors, we're saving 12% a year on payroll. How's that even possible? And it's because when you reward based on merit, you get a bell-shaped curve. Some people are killing it, making a lot more than they would have. Most people are making about the same, but some people that are just like, hey, it's just a job, I'm just trading time for money, that's okay, as long as you're meeting the standards. This transforms that business from the inside out and that's what the private equity, those guys who want to purchase these kind of businesses, that's what they're looking for and that's what we did with this company you're talking about and I think that was one of the biggest selling points was right, market right, this, right, that, all that.
Speaker 1:And it's that part of when you mention like, is your company sellable, and making it sellable, is that what you're talking about specifically is the ease of transition. It's the ease of process, yeah it is.
Speaker 2:I would say it's this it is. You know, if you come to Colorado and I give you the keys to my car, you're going to be able to drive it because somebody put that car together with only requiring a minimum level of understanding. If I go to Charlotte and hop in your truck and I can drive it because all that stuff is put, that's what they're looking for.
Speaker 1:They don't want.
Speaker 2:Eric's car or David's truck. Right, they want a truck that will do these things. And if I put a good driver in it, bingo. That's the other part of it too, guys, it's not just. Is it owner-centered? Is it your team? Only Amanda can do the front desk job, because it's all been woven around Amanda's personality.
Speaker 2:And if Amanda leaves and, believe me, they want to know about this they're like if you sell this, is your whole staff going to leave? What would happen if they did leave? That's a lot of the questions that they go through. So, yeah, it is. And again, some people will take that too far and say, well then you're saying no one matters. It's exactly the opposite. Because you matter so much, I want to give you the best race car and get you in the Indy 500. So I want that system to be so good so you can just drive the heck out of it and get that touchdown, get that checkered flag every time. That's what these entrepreneurs out there who are buying and selling, and I'm going to tell you we're coming into a selling frenzy and it's like, hey, if you've ever thought about doing it, man, now's the time to start looking at it.
Speaker 1:What are some things you would be looking at? Okay, are you looking at I've used the contractor before right, so you're a general contractor. You would be looking at other general contractor businesses. Or would you be looking at HVAC? Or would you be looking at a plumbing company? That's perfect.
Speaker 2:Yeah, that's exactly perfect. So, as you would expect, the answer is it depends. But in general, though, let's say perfect. So, as you would expect you know, the answer is it depends. But in general though, let's say we got an electrical contractor, 30 employees and now they're getting to where they can do like the EV charging stations. But you know they're noticing some other places out there do electrical and plumbing Right, or they're starting to have these add-on services where they're consolidating. Consolidation is an option.
Speaker 2:What you want to do again is just as you and Jason wrote in your book you want to find a subject matter expert. You don't want to reinvent the wheel, you want to bring them into your operation. And one way to do that is to find somebody across town who's doing that and say, hey, man, let me take you to lunch, tell me about the next five years. Man, let me take you to lunch, tell me about the next five years. And they're going to say, well, I've been doing this for 30 years. So let's say they started at 25. They're now 55. And you know they're ready to be done, but they're not sure if they can be done. And you say, hey, here's a way to cash out and preserve what you have created. That's a conversation a lot of people want to have, so it can be.
Speaker 2:Adding on services, I would say in general, this is going to happen primarily in the service sector.
Speaker 2:It can happen in the product sector, it can, and there's some other sectors that it can happen in, but maybe not as readily or it takes a little bit more to do that. But even in the product sectors I'm starting to see lots of people very interested in buying up market share and saying, hey, here's an offer, can I buy this market share? And unfortunately, what Vulture Capital does is they're buying your customer list and they're going to trash everything else. That's where I think it goes into unrighteous. I'm not going to judge somebody about that, but I would say, as a kingdom minded business owner, I wouldn't advise someone to sell their business that way, you know, because everything you work for is going to get obliterated and they're just buying your good name and reputation. And if that had to happen, ok, again, I don't want to make it a completely moral issue, but I do want to say if everyone did that, then BlackRock and the big multinationals would own everything and you'll be renters and you'll be happy. I remember that quote coming out.
Speaker 1:Klaus Schwab, world Economic Forum. You'll own nothing and you'll be happy. It's like no that.
Speaker 2:We're going to stand in the way of that and I just want to encourage any business owners listening to say, look, you may need a quick exit and go that direction. That's between you, know, you and the Lord and your process. But if it's not in that urgent mode, maybe even if it is, pray about it, because that territory, man, that real estate, it's like Monopoly, right, it's like Boardwalk, like oh, think twice before you give up that ground, because I think this is a time for us to go in and possess the land and to establish a whole different way of doing business.
Speaker 1:Yep, I agree with you on that one. It's interesting. We have a brand new school here in Charlotte that's about to open up. It's called Ambassador Christian School. Melissa Gibbs, who is Joe Gibbs' daughter-in-law her husband, jd, passed away left her some money and she, as a faithful widow, faithful to the Lord, bought a megachurch that was not doing well. She's reconditioned it, positioned it, turned it into a school and she's going to make it a trade school. It's interesting. She said we need to raise up the next generation for the trades because that's where the biggest opportunity is, and I agree with her. And you're saying the exact same thing with all these businesses that are literally going to be sold or they're going to be closed. Yeah, yeah, a lot of them are the trade businesses.
Speaker 2:Well, another thing, david, to get people truly excited, because I know there's a lot of doom and gloom out there. Thing, david, to get people truly excited because I know there's a lot of doom and gloom out there. Listen to this, guys we have the best demographics in the world. Gen X is a little smaller than we would have liked it to be, but all the other generations are doing the right math and you're like, oh, what in the world does this mean? China is an inverted pyramid, meaning they have tons of old people and they don't even have 50 year olds, much less 30 year olds and 20 year olds. Okay, so what does that mean? It means the same in Germany and the same in Japan and the same throughout Europe and definitely Russia. What does that mean? It means in the next five to 10 years, america will become the producer. America will become the producer.
Speaker 2:We have been the consumer since about the 70s on. We slowly stopped making stuff and we just consumed stuff. In the 50s and the 40s we became the big about automation. Can't China just put in robots? Sure, they can Huge upfront costs. That gets more expensive as you go. So, no, a country that's running out of its ability to produce isn't going to be able to do the robot thing. And the reality is, when you talk about the trades, you're not going to get a robot anytime soon that's going to actually know how to do electrical engineering or wiring Unplug your toilet.
Speaker 2:Yeah, ain't no robot doing that Exactly. So the point of it is this we have a huge opportunity. America is going to be sitting absolutely pretty, no matter who wins the election. Don't be too doom and gloom on that. I have concerns myself, but I'll just say this Realize that the righteous foundations that were laid by the founding fathers and the ethic of Christianity, that children are a blessing, that arrows in the quiver are wealth.
Speaker 2:That idea is saving our bacon amongst all of our mistakes and all the other things that we've done. And what does that mean for small business? I am telling you what we are going to become producers like you've never seen before. The Rust Belt is going to become a gold belt and it's going to happen in the service industries. And what an opportunity. And I know it feels kind of dark right now, but I'll tell you what it probably felt dark in that wilderness, standing outside the promised land and those two spies saying we can take it. Well, me and David are here, and Jason and Spirit, and we're saying you can take it, and we got to take it, and that's what we want to help you do.
Speaker 1:That's amazing, eric, tell us again how can we get information? We'll put the link in the show notes to the Entrepot Classic, this three-day challenge about how to simplify your business, multiply your company value and sell at top dollar, or put it on cruise control.
Speaker 2:Just head over to simplifymultiplyexitcom and we'll get you registered. Love to have you there. Even if you can only make one night, like we said, it should be a great time of getting into the nitty gritty of how to do this and how to get ready for it. So you guys know me and certainly David and Jason by now. We want to show you how to do it. We're not salesmen. We want to show you how to do it, and if we can help you with that, of course we will. But this is not going to be a three-day sales pitch. This is going to be get there, get ready to work, get ready to sweat, and we're going to give you a roadmap for it. So hope to see you there.
Speaker 1:This is going to be awesome, jason, and I have been in this with Eric. He has done phenomenal work for our company. When I took the flagship assessment, it was an eye-opener for me, so I'm super excited about offering this to our audience and everybody else. You just push this out to friends that you know we would love to get this entrepreneur classic filled up and and you're doing it, eric, with Michael Pink, who's the sale guru of America. He is a solid Christian.
Speaker 1:I love his just the sales strategy of the rainforest and just I mean he utilizes a lot of God's creation and God's word to talk about how to sell and sell problems like Pete. Nobody wants to be sold, but everybody wants to buy, so how? Do you get the opportunity to buy what you have. That's the key. So all right, eric, thank you so much for being on with us. I can't wait to have you back on and I can't wait to jump into this classic Awesome man.
Speaker 2:Thank you so much.
Speaker 1:God bless you guys. We'll see you next week. In the meantime, subscribe rate review. Send this out to some friends. Hey own every single area of your life, especially your faith, especially your marriage, especially the relationship with your children. Because if we succeed and we win in business and make all this money or whatever and we are lacking in any of those areas, it doesn't really mean anything. What does it profit a man if you gain the whole world and forfeit your soul? So focus on your soul with Jesus and your relationships. All right, god bless you guys. See you next week.