The Exitology - Grow to Exit Value Acceleration model fills a much-needed gap in the value enhancement and exit planning process.
Exitology is a proven business growth model that helps companies grow up to 33% annually, by maximizing their resources so it won’t cost them a penny. This allows the owners to exit in the most advantageous way they choose. For rapidly growing companies who are in a 3-5 year exit horizon, we help them create new revenue records while they maintain or increase their profit margins.
For companies who are transitioning or moving through a succession, we often act as a stabilizing force between the “old guard” and the “new guard”.
Below, you will find resources and answers that I trust will help you better understand our model and how it might add value to your business and your success.
First, let’s agree that Business Growth Strategy and Exit Planning are the same thing. Planning for your eventual exit, even if you never do, is simply a good business strategy. Think of it as your insurance policy.
A small sample of common questions that we hear when a business owner is starting to wonder about their future, include:
All of these are good starting places, and it’s good to start thinking ahead. Along with reading this FAQ, consider picking up a copy of Exitology and learning more about the Exitology - Grow to Exit Value Acceleration model to see if it applies to your situation.
Our ideal client profile is a privately owned business, in the blue collar industrial space.
This business is growing but wants to grow faster while maintaining or growing profit margins.
This business would have $5-20m/annual revenue and an Average order value $10,000+.
They would have a sales person or team in place, and are in the Business to Business (B2B) space.
The owners are seeking to exit in the next 3-5 years.
We are focusing on taking blue collar and industrial business owners who are getting ready to sell in the next 5 years all the way to the promised land.
A good fit usually has a privately owned business, minimum revenues of $5m/year, a B2B offer, and a sales team in place.
The owners must have a growth mindset, capacity to fill (or be willing to create capacity), and a hungry sales team.
We grow their company by up to 33% annually, by optimizing their resources, so it doesn’t cost them a penny.
Our experience and client bench consist mostly of companies who are in the $5-20 million annual revenue range.
For the last two decades, our company (and predecessor companies) have worked with blue collar, industrial, construction, B2B companies, and the advisory firms such as M&A, Investment Banking, CPAs, etc., who serve these types of businesses.
Our methodologies are best suited to companies who are achieving $5 million in revenue and up.
Having said that, some businesses who are in rapid growth mode and are seeking to grow to exit will benefit from working with our company if they are at an earlier stage.
Statistics show us the truth about business owners who want to sell their business, and they are not pretty.
First, 80% of businesses will never sell.
According to the Exit Planning Institute, for every 10 business owners who want to sell their business, only 2 of them will be able to.
Further, for the average business owner, 80% of their net worth is tied up in their business.
When you do the math, this means 8 out of 10 business owners are going to find themselves losing 80% of their net worth upon retirement.
Planning is the first step in creating the type of exit you want from your business, and it begins with “starting with the end in mind”.
Every year, on January 1st, the clock resets itself.
When it does, so does the risk of your worst-case scenarios showing up. They’re known as the 5 D’s, and each year you have an 80% chance of experiencing one of these over the next sixty months:
5 D’s:
While unpleasant to think about, these 5 D’s cause owners to be forced out of their business on someone else’s timeframe, rather than theirs. They can cause economic hardship for the business, and value destruction.
The fix for this is simple: Preparation. Begin with the end in mind, such as by employing the Exitology - Grow to Exit strategy. As part of your Value Acceleration journey, we work with the owners and their advisors to de-risk the business in the unfortunate event of one of the above D’s occurring.
There are a number of reasons why you might not be able to sell your business today, or for 3x its current worth in the near future.
Let’s take them one at a time. For starters, most businesses are experiencing one of the following issues at any given time:
Cash Flow issues, staffing issues, family or generational issues, and succession planning issues.
Diving a little bit deeper, we see these core problems manifest themselves in many ways. It can look like slow / flat or declining sales, or a business that is too dependent on the owner.
For example, in serving blue collar and industrial services firms, we often see that the owner has been the primary rain maker for 20-30 years, and they often hold out as a point of pride that they’ve never had to market.
In these situations, we often see client concentration risk, where the top 2-3 customers make up 40% or more of total sales. This problem alone, left unaddressed, shaves 7 to 8 figures of value off of most businesses that we encounter.
Other common issues we see that keep your business from selling for all it’s worth is the inability to show historical data (choose your acronym: KPI’s, Key Numbers, OKR’s, Metrics). Even further, if that historical data isn’t telling the story of a non-owner dependent, growth curve, you’re leaving most of your value on the table.
Other clues to a business that won’t sell for what it’s worth today include not having sales infrastructure, not having a sales system, missing documentation around sales processes, and ineffective sales management and team.
The problems created from all of the above end up with the owner either being forced to sell for “pennies on the dollar”, working well past their desired date, or simply having to walk away from their life’s work.
All of the above is exactly why Exitology - Grow to Exit and the Value Acceleration model was put in place. To help you grow, and then sell your business for triple its value today.
First, congratulations. You’ve built your business up to this point. Long hours, often sacrificing time with family, friends, and even your health to make it here - you’ve earned it. That’s the good news.
For most owners, the bad news is that they’ve chained themselves and their wealth to the business itself and it’s going to take a change in strategy to unlock your potential to achieve the wealth event you’ve earned. Bottom line: Most owners have 80% or more of their wealth tied up in their business.
Fortunately there is a way to unlock your wealth. There are five aspects to moving you from chained to your business to being able to free yourself from the business.
First, is to identify where you are. Next, to protect what you’ve earned. Then, to build your business by extending your profitable growth trajectory. Fourth, to harvest your wealth. Finally, to manage your wealth.
In our work, we help business owners to identify, protect, build, and see them through the harvest. It’s a team effort, and we have a large network of proven, vetted experts to help you along the way.
Step one is to identify where you are, so that we’re dealing with the reality of how close or far away you are from your own exit event.
To identify and assess where you are, first consider the following three areas:
Your wealth gap is your personal business. Working with your wealth manager, you want to understand how much your net worth needs to be in order to be financially free. We often use the term “F.U.” money, which stands for “Freedom Underwritten” (not those nasty words you may have thought). When a business owner has understood their wealth gap, often that is when they consider the Exitology - Grow to Exit Value Acceleration model for their business.
To calculate your Wealth Gap, which is the additional wealth you need to accumulate to meet your goal, use the following formula:
Your Net Worth Goal - Your Current Actual Net Worth Not Including Your Business = Wealth Gap
Another way to understand your net worth goal, is simply take what you need to earn personally, every year, and multiply that by 25. This will get you a starting point.
Most business owners we meet with are a few figures short of their personal net worth goal. However, when we look at their business and how to unlock their profits, and their potential, in most cases there is a 3-5 year time horizon to get them to the promised land.
Looking at the business, we then look at your Profit Gap. Profit is an important word, because it is the cornerstone of your transferable value.
The Profit Gap is defined as the Profit You’re Sacrificing by Not Operating at a Best-in-Class Level. The unvarnished truth is that 80% of businesses aren’t there. To calculate your Profit Gap, use the following formula:
Best-in-Class Profit at Your Level of Sales – Your Actual Profit = Profit Gap
Finally, we look at the Value Gap. If you’re seeking to harvest your value, your value gap is the business value you’re sacrificing by not operating at a best-in-class level. To calculate your Value Gap, use the following formula:
Best-in-Class Value at Your Level of CashFlow – Your Actual Business Value = Value Gap
How will you bridge the gap? Exitology helps you get there.
Our studies and experience show that most business owners are seeking a combination of the following:
At the same time, studies show that out of 10 business owners who seek to exit, only 2 of them will. Further, out of those 2, nearly 80% of them will be unhappy within the 24 months after exiting their businesses.
Put differently, in a room of 40 business owners who want to exit, 2 years later a single person will be left standing with a smile on his or her face.
These statistics are dire. And they contribute to well founded fears such as:
Many clients who come to us have already tried:
And yet, nothing changes. It leaves them with these problems:
The cost of inaction is huge. It’s not always obvious, because temporary success is often covering a multitude of sins. It might feel like you don’t have time today, however, one day that will be true for real. You will run out of time.
Bottom line: If you want to sell your business in the next 5 years, come to us and we will get it ready so you get one heck of a payday.
The truth is, working with a strategic business growth expert is not for everyone. Ultimately, it’s up to you, the business owner, to determine whether or not our methods and results are part of what you desire out of your business journey.
For our part, we’re choosy. We don’t work with most of the businesses and owners who reach out to us. That’s because we only work with clients who align with our values, and who exhibit these characteristics:
The owners must have a growth mindset, capacity to fill (or be willing to create capacity), and a hungry sales team.
We create 33% YoY growth, adding at least $1M new revenue, for privately owned blue collar and industrial services companies – optimizing your existing resources so it won’t cost you a penny.
These owners must be interested in investing towards this outcome over the next 12-18 months and then reaping the rewards.
Because of this approach, we typically keep our clients 15x longer than comparable firms, because we’re a strategic business growth partner to our clients.
As we continue to pay for ourselves many times over, as of this writing we’re seeing an average 40% business value increase year over year for our client bench.
It’s all about serving the client.
Our firm focuses on the revenue generation side to fill in the gaps where your expert firm doesn't play. Our intention would be to let you fully embrace and own all of your areas of expertise and consider us a trusted partner to fill out the rest of a holistic approach to business growth for your clients.
We ask to be held accountable to the mission, and agreed upon Key Numbers, and that the other stakeholders involved would do the same.
In many cases, yes. After a client goes through their initial engagement with us, or are considering, they will do some significant due diligence. This is encouraged as we want to ensure that all parties are a good fit for each other.
Where appropriate and where allowed, we will share case studies and similar situations that we feel are applicable for your growth journey.
We’d invite you to inquire about joining us for an Executive Briefing where we walk through our business growth model, and share specific client success stories. We also have a number of documented success stories described in great detail in Exitology (available on Amazon) and throughout this website.
Exitology represents the applied wisdom of nearly 3 decades of battle tested, proven strategies to accelerate business growth in a way that allows you to maximize the value of your business so you can buy back your time and freedom.
To that end, our firm’s CEO and lead strategist, Jason “Wally” Waldron is a Certified Exit Planning Advisor (CEPA) and we’ve closely integrated our business growth methods into the Value Acceleration Methodology of the Exit Planning Institute, and extend our reach to whom we serve.
As you’re researching, we invite you to look at these resources as a starting place to better understand how you will Grow to Exit.
Moving through the Return on Investment (ROI) Zone is perhaps the most important transformation that our clients experience. Moving through the ROI Zone is the cornerstone of all profit maximization and value creation.
Experientially, business owners and their teams often experience a newfound optimism, and a feeling of “reigniting the startup energy”. For the number crunchers on the team, they benefit from getting objective again.
Ultimately, we help the owners to create a profitable growth strategy, to remove roadblocks between growth goals and their current state, and to uncover missing revenue streams.
When we work in concert with the business owners (and often their advisors), we co-create with them a growth and implementation roadmap that clarifies their 8 figure profitable growth plan and creates a foundation for their exit options.
The bottom line is that once you’ve taken the first step through the ROI Zone, most business owners have realized a path to 3x, 5x, or even 10x ROI on their growth.
From there, as they work through our strategies, we take the next steps with them as they profitably grow up to 33% year over year, paying for our involvement over and over again as we become valued growth partners and a profit center for your business.
Here are 3 examples below of what can happen when you begin to add revenue growth, on top of profit growth, and then put it all together with a comprehensive value enhancement of the business. Notice the importance of increasing profit margins and moving to a best in class cash flow multiple.
Remember, each business is different, the below are simply for illustration.
Example 1:
A company with a 3x Multiple Growing Revenue Only
$5,000,000 revenue/year business:
7.2% cashflow = $360,000
X 3 = $1,080,000
$10,000,000 revenue/year business
7.2% cashflow = $720,000
X 3 = $2,160,000
ROI with Growth = $1,080,000
Example 2:
A company with a 3x multiple grows revenue and value, to have a 6x multiple
$5,000,000 revenue/year business:
7.2% cashflow = $360,000
X 3 = $1,080,000
$10,000,000 revenue/year business
7.2% cashflow = $720,000
X 6 = $4,320,000
ROI with Growth = $3,240,000
Example 3:
A company with a 3x multiple grows revenue and value and profits to achieve a 12x multiple.
3x Value to 12x Value
Growing Revenue, Profit and Value
$5,000,000 revenue/year business:
7.2% cashflow = $360,000
X 3 = $1,080,000
$10,000,000 revenue/year business
20% cashflow = $2,000,000
X 12 = $24,000,000
ROI with Growth = $22,920,000
The numbers above, show the importance of taking a comprehensive growth and value enhancement approach with your business.
Often yes, but the honest answer is “maybe”. We suggest you attend an Executive Briefing and learn more about our growth model and see how it fits with your impending exit.
Often, considering a new path such as Exitology - Grow to Exit, can be a stretch in your thinking and your experience.
We invite you to consider from which lens you’re looking at your business. Is it through a 5-10 year timeframe, such as an investor would look at your business? Or perhaps it’s on a closer timeframe such as a year or less.
Over decades of experience, we find the reason for instinctively saying, “We don’t have the budget” is often incredibly simple. Business owners are often much too close and emotionally involved with every aspect of the business.
When you’re that close, it’s tough to identify problems that can either be solved or turned into great opportunities which are present in nearly every business.
When Exitology is applied to a business, it immediately unlocks enormous opportunities. Often with some simple actions and a new perspective, sales and profits explode.
What if you could view your business with fresh eyes and without deep emotional involvement? Costs can be slashed, profit margins increased.
This is why Exitology exists. Exitology uncovers business opportunities, defines your end game by answering your Ultimate Question, finds your company’s natural balance, and—most importantly—allows you to define your exit, wealth event, and legacy.
As you think through your objectives, think through where your spending priorities are right now, and which of those will support your ultimate goals.
Consider that Exit planning and Value Acceleration, done correctly, is simply a good business strategy. Growth from profits is a good business strategy.
Either the time is not right, we are not a good fit for you, or you haven’t gotten creative enough. (We pay for ourselves many times over.)
We have found extra budget, and often put money back in the owner’s pockets through creative reallocation of resources, advanced tax strategy, and alternative capital resources. Sometimes, a combination of all three.
The bottom line is that once you’ve taken the first step through the ROI Zone, most business owners have realized a path to 3x, 5x, or even 10x ROI on their growth. From there, as they work through our strategies, we take the next steps with them as they profitably grow up to 33% year over year, paying for our involvement over and over again as we become valued growth partners and a profit center for your business.
The numbers tell the story in your business.
In support of closing your Wealth gap, your Profit gap, and your Value gap, and moving rapidly into the future that you have created for yourself…
Every one of our Exitology - Grow to Exit clients gets a dashboard that holds the business accountable to the numbers, within the context of their overall goals. They are as follows:
7 Key Numbers to track to grow your business to a profitable exit:
At the end of the day, you should be able to add up all of the above costs and generate the most important number: Cash flow.
Measures of Success to Consider when using the 7 Key Numbers to Grow Profit, Value and Exit your business.
All business actions should be considered in alignment with the above 7 numbers.
Hold your business growth team to a minimum of a 3:1 expected return on investment.
Create and nurture a culture of “1% improvement every day” in support of the improvement of the above numbers.
As you implement all of the above, you can expect to move into the best in class quintile, and reap the appropriate rewards of a maximized transferable value of your company to the buyer of your choice.
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