Treat Your Business as an Asset
With Guest Nick Bradley
Exiting your business is a phrase that conjures mixed emotions. Some see it as the end of an era, while others view it as a transition to new beginnings. However, one thing is clear: the way you exit your business can make or break your financial future.
The How To Sell More Podcast
September 11, 2023
Thinking about selling your business one day? You're not alone, but you might be going about it the wrong way. Our guest, Nick Bradley, shares a mind-blowing idea: Don't wait until you're ready to sell to start planning your exit.
Here's what you'll learn from this eye-opening episode:
- Start planning your exit years in advance, not just when you're tired or bored.
- Treat your business as an asset, not just a passion project.
- Understand that exiting your business is a big money moment, possibly the biggest in your life.
This is wisdom you can't afford to miss.
Meet Nick Bradley, a rockstar in the world of business. With over a decade in Private Equity, 117 acquisitions, and 25 business exits totalling $5.3 billion, he knows a thing or two about scaling up and selling businesses.
Unlock the secrets to exiting your business the right way. Tune in now!
- Early Preparation is Essential for a Successful Exit - To get the best value for the business, owners should focus on building the elements that make the company attractive for acquisition, well before they plan to exit.
- Reimagine the Business as an Asset, Not Just a Passion Project - Reducing the business's dependency on the owner makes it more attractive to potential buyers and easier for the owner to exit.
- The Exit Process is a Journey, Not a Destination - Nick advises that exiting should be viewed as a journey that involves constant refinement and optimization of business operations.
Top 3 Reasons to Listen
Unlock the Secrets of Early Planning: This episode features invaluable insights from Nick Bradley on why planning your business exit years in advance is essential for maximizing its value.
Actionable Advice: Beyond theoretical knowledge, this episode provides actionable tips and strategies that you can immediately apply to your own business exit planning.
Financial Milestone: Gain an understanding of why the business exit could be the most significant financial event of your life, and how to treat it as such.
Links to This Episode
Follow Nick Bradley on Social
More About Today's Guest, Nick Bradley
“The Exit Guy” | Ex-Private Equity … +100 acquisitions & 26 exits | Founder of HighValueExit.com | Host of ‘Scale Up With Nick Bradley’ podcast
Nick Bradley is known as 'The Exit Guy.' He specializes in assisting ambitious entrepreneurs and investors in scaling their businesses to achieve high-value exits. He is also recognized as the host of "Scale Up With Nick Bradley," a podcast that has earned the distinction of being the #1 Business Podcast in the UK.
With a track record boasting more than 100 acquisitions, the sale of 26 businesses, the creation of $5 billion in value, and a decade of experience in Private Equity, Nick Bradley possesses the knowledge and expertise needed to guide others in building substantial wealth and achieving financial freedom.
A Transcription of The Talk
Mark Drager: Nick Bradley. Oh my goodness, I'm so happy to have you here. So you are the host of the Scale Up podcast. You're also the founder of High Value Exit. And you're known as the exit guy, because essentially business owners come to you because you have done billions of dollars of transactions in the investment banking world in the mergers and acquisition world. And now you're applying all of this learning to help medium-sized businesses. I want to hit you with the first question. So most people think of exiting their business, selling their business as this one-day thing, you know, like one day when I'm 61, one day when I'm tired, one day when I'm bored. Is that the right way that business owners should be thinking about their businesses?
Nick Bradley: No, wrong. I should say hello first, Mark, it's a pleasure to be here. And thank you for the very kind, generous introduction. Listen, the reason it's a no, and I get parochial about it, is that it's the biggest financial event that any business owner has the opportunity to go through. Right, there's nothing else, unless a business owner does it a few times, that a business owner is going to get when they sell the company. They're never going to do that selling their house, not going to sell it, spending, you know, selling a nice Rolex or whatever, right? So my view is you've got to prepare well in advance to achieve that outcome. And it is an outcome, it's an end goal, okay? And in order to do that, there's a heap of stuff that you have to do over a considered period of time to build enough value in your company that someone will find it attractive to purchase from you. More time, in my opinion, needs to go into preparing for the exit than most business owners give credit to.
Mark Drager: You and I have known each other for gosh, I think almost three years now. And we've spent a lot of time together, I've learned a ton from you. But one of the biggest transitions that I worked through myself was how I actually saw my business. I come from an owner-operated passion, mission-led, you know, all of that "start with Why," build a great culture, build a great team, deliver for your clients type approach. And I realized that there's another way to look at businesses, as much more of an asset. An asset you can hold, an asset you can build that maybe your personality isn't quite so baked into. So that way, you can actually envision yourself removing yourself from the business, extracting yourself from the business, selling this asset, something that is an asset, as opposed to just, "I'm going to spend the rest of my life dedicated to this passion play." Do you find that owners and entrepreneurs kind of fall into these two categories? And is this a common kind of trap that people like me fall into?
Nick Bradley: They don't see that it's the same thing, right. And what I mean by that is, it's part of the same journey, right? So you can build a business that creates some level of freedom or independence, or you right, it can be a small business, like a lifestyle type of business. And it allows you to take control of your income, right, but not necessarily have a boss, etc. Now, that's great. No, no judgment on that. That's fantastic. Lots of people do that. And more, more and more people are doing it now. But what you can also do is you can create that same type of business, but you can also build something that, as you said, has more value to it, that at some point in time where you don't want to do that thing anymore, you have the ability to remove yourself from it. And one thing I'll say is an exit is not always a sale of a company, an exit is the removing of yourself from the operations usually, or the board or any type of governance of a company. You still can be an owner and have a business that generates income for you. You're just not necessarily having to run that business. So there are different types of exiting. But I think what most business owners do, in my opinion, as you said, is they look at it just in a very linear way, which is, "I start a business, I make money, I start a business, I make money," etc., etc., where they don't think, "Well, hold on, if I think about this, I'm building something that could one day be valuable to someone else. I'm actually going to sell my business, I'm going to monetize my business," but a way of saying it multiple times, not just from the income of running it.
Mark Drager: That makes a lot of sense. You know, last week, I was talking to Derek Sivers. He built up a company called CD Baby, sold it, I think in 2008, maybe it was 2007, 2006, something like that, for 22 million and donated all of the money, all of the money. And I said, "What the heck? You've been working for 10 years, you built this company, you sold it, and you gave away all of the money. How does that make sense?" And he said, "Well, Mark, you have to understand, like I built a real business. Most people think of entrepreneurship as this, like you're operating at a loss and you're bringing on shareholders, and the exit is the only way you make money." So he said, "I was making $4 million a year. So when it came time to sell, it was more like I just wanted to get rid of this thing, you know, and give the weight money away because making a million dollars a year wasn't a big deal." And I was like, "Oh, right," you know.
Nick Bradley: Well, that's very generous of him. I think I may maybe give some away.
Mark Drager: I dug into it. It was also a good thing to do. It was a nice thing to do. He felt good about it. And it was a very tax-advantaged thing to do as well. So that made a lot of sense. But you might be listening to this now and you might be thinking, "I'm nowhere close to exiting my business. I haven't even thought about selling my business." And so before we jumped on the call, I was talking to Nick about it. Because there is a roadmap, even before you start to contemplate exiting your business, there are things you need to do to be able to scale up your business to get ready to sell it. And I was thinking that the principles of going out and maybe getting money from shareholders, selling equity, building a board of directors, bringing on these partners that will help you scale your business and professionalize it. So that way, one day, you can step back from it; one day, you can sell it. I kind of believe that these are the same steps, the same principles on rinse and repeat, whether you're selling your business or whether you were building it to be ready for you to exit. There are probably some principles that have to be repeated. You've developed a Scale to Sell methodology. So what would be those things we should all be starting to focus on?
Nick Bradley: So it's worth conceptualizing the idea of the exit, as I mentioned, the outcome, right? So, you know, if you don't have to do it, right, it's not like, you know, you might not be thinking of it for years, or it might be something that you have to do because something happens in your life where there's a transition or a change. My sort of view is you need to be prepared for that, right? You can't just assume that everything's always going to be as it is. You know, the world's changing massively. But in order to do that, and I'm a big, big believer in reverse engineering the outcome, right? You have to go through a series of stages to build up the right foundations in a company to be able to have the opportunity to have that choice. Okay. And so the framework that I created, Scale to Sell, is very much about how you scale a business, what I think is the best way to scale a business. Certainly, the stuff that I learned when I was in private equity, it's very precise and clinical. And the amount of value that's created from those private equity firms is usually significantly more than most entrepreneurs will realize when they grow their own company. So you've got to think, what are they doing? Right? So that's the scaling. I'll go through that in a second. And then obviously, the exit is really just the outcome of all that preparation work, all that stuff that you've done to create the foundation. So the first point, as I mentioned, is reverse engineering. So understanding what you're building your business for. So you might say, "Well, I don't know yet." That's fine. But it's worth asking that question.
Mark Drager: Let's just pick something that's important to me. Let's say profits. Let's say we want to be like Derek Sivers, $4 million a year that the company is just throwing off.
Nick Bradley: That's a goal that you have to work back from. Okay, so let's play with that. So let's say your business is wanting to achieve that level of profitability, right? So that's the outcome, the end game. But then you have to know where you are today. So you create the delta. Whatever that figure is, now you know your A and B position. So I often say, "Okay, now you've got that. You've got to start to look at what are the various strategies and strategies are simply the choices you make that are going to allow you to achieve that outcome." And from that, you have to look at the various levers that you have. So that's things like your sales and marketing activity. Okay, firstly, do you have a predictable, repeatable, and sustainable way of generating new customer acquisition? Do you have the right operational structures and processes in place to fulfill or manage that work, right? That's quite simple. Then you've got the economics, right? Do you have a good grasp of the way the metrics are working, both leading and lagging indicators? Leading, obviously, meaning you're seeing stuff that's going to be predictable into the future. Lagging means it's things that have happened in the past that are showing you that predictability. And then it comes down into what a lot of people talk about, having the right team, the right people in the right seats, the right culture that enables those processes to happen. So in private equity for, we would think about doing something clever like buying other companies and putting them together or that sort of mergers and acquisitions where we simply assess the foundations of a company. Because you can't scale on poor foundations. So unless you've got that predictability happening through your commercial model and everything else I mentioned, you can't move on to the next part of my framework. There's no point. And the thing I'll say here is a lot of founders never ever go past that. They're always just trying to work that bit out. And for me, that's something in private equity, we don't get distracted on it. We want to go simplicity first, do a few things really well versus a lot of things poorly, measure everything, make sure that we're starting to see green shoots of traction and double down. And that's where we would bring in investment, your point beforehand, we would bring in investment at that point to double down on the things that are working to scale quickly.
Mark Drager: You know, one of my favorite entrepreneurs is Gordon Ramsay. And I loved watching his early work. By early work, I mean, like right when he started getting on television, oh yeah, he's good. He would come into these restaurants with Kitchen Nightmares. And he would immediately cut the menu down to like six things that he knew that the team could deliver. He would right-size the menu for the team. He would focus on those six things. He would make sure they could do it. He would cut the staff that were dead weight, he would build up the people who were really good. And he would say, "I know that this seems small. I know that seems narrow. I know this seems boring. I know you think you're gonna alienate customers, but we have to do the simple things really, really well. Because we can't build on that." And inevitably, these restaurant owners would have like 40-page menus with all of this stuff. And I love that. I love that because I have to be reminded of that all the time, you know? I wrote down your notes here, right? It's about building sales and marketing so that way you can have a predictable lead flow that you can predictably close, so you can have some predictability. And then you build operations so you can predictably deliver those things. And you can then run metrics to be able to say, "Okay, what are our benchmarks for sales, for marketing, for lead generation, maybe for cost of acquisition, or whatever KPIs you might use? And then the operation side, what are our benchmarks?" And once everything is predictable, you know, going back to Ramsey with the six things, so once you do those six things really, really well and you can do it time after time after time, you can start to make improvements to see if that helps you get better or not. This is such a systematic approach to business. It seems to make so much sense to me, which is why I've loved hanging out with you the last few years. But this is so foreign, in my experience, from the way that almost all entrepreneurs work, because we become entrepreneurs and we become business owners so we don't have to deal with all of that structure all the time.
Nick Bradley: But you don't have to do it. You have to bring people in, you can.
Mark Drager: Okay, I was gonna say, are there roadblocks that you see as you sit down and, and I know that people hire you, you fly all over the world, like you literally fly in all over the world to meet with these high-profile business owners who are facing some of these big challenges? Are there mental roadblocks that you find that we all kind of run into time and again?
Nick Bradley: Yeah, there are what I would call consistent themes. And I'll be frank, I mean, I fall into those patterns as much as anywhere when I'm thinking entrepreneurially about the stuff that I want to do because I have to remind myself that focus is a superpower, right? And if you want to be successful, it's about that, the old saying of going an inch deep versus you know, like a mile wide, or sorry, a mile deep versus a mile wide. You want to be able to get deep enough to be able to get the result, okay? And I love the whole Gordon Ramsay thing because it's exactly that. And the one thing I'll build on that is, it doesn't mean that you just do the six things forever, you optimize the six things, and then you earn the right to do the other thing, right? And then you don't add 20 other things to it, you might add one thing to it, that's the way it works. But back to your question around mindset and themes, I see that most entrepreneurs, and I think it's just the general trait of entrepreneurs, is that shiny object. We have either this curiosity and desire to do multiple things because it piques our interest, or we have a fear of missing out. And that if we say no to this thing here, it's going to be the one thing that changed everything. And I often say that I go through personally a season of nos. So I'm gonna say no to everything. I'm gonna say no to everything until I get what I want from the thing that I'm working on. And then I might start entertaining the yeses again. But that's kind of the antithesis of entrepreneurship, right, in many ways.
Mark Drager: What you're describing, if we circle back to the opening, the idea of being able to have each one of these systems be predictable, be able to measure them, be able to make improvements, it took me a long time to realize that the reason why we have to do a few things really, really well is because to be able to measure and track all of these elements requires a certain amount of bureaucracy. I hate bureaucracy.
Nick Bradley: I don't think that's the word, to be honest. But I know what you mean.
Mark Drager: I consider bureaucracy because it's like, oh, let's go through the steps to slow everything down. But like I want the end result, I want the ability to track everything I want. You know, for my business project level profitability, I want our tracking, I want to know, I want to know which line items or which items which classes, I want to run, separate P&L for things so that way I can have the business intelligence to make really smart decisions. But the amount of time and money and how slow it is, is why I call it bureaucracy. It drives me crazy. But I realized at a certain point that you have to keep the number of things you do simple. And the number of ways you do it simple. Because just being able to track all of this stuff requires so much complexity, that if on the top end of your business, you suddenly start running multiple line items, or multiple SKUs. Or anyone in production or manufacturing knows like, hey, let's just add 10 more colors. And then you're like, oh my goodness, how complex that gets when you when you go ahead and boil it down into what that really means for shipping and production and everything else. So do you find that the most successful businesses are keeping that top end simple because they know how much work has to happen kind of behind the scenes to keep the business operating.
Nick Bradley: It's also back to resource management, right, and what you have there, the resources remember not just time and money, it can also be bandwidth and mental sort of space. So the more that you overload yourself with too many things, again, it comes back to the idea you're never going to be able to execute brilliantly if you've got too many things going on. But the trick is to make sure that the best projects, the things that you are going to go deep on, are the ones that are going to get you to the result. So we go back to the delta we spoke about beforehand, you know, getting to that 4 million profit per year or whatever the figure was, you've got to then look and say, well, that is the thing that I'm focused on. Now this project that I've given myself permission to work on isn't the thing that's going to get me there isn't the best choice out of every other choice that I had. And most people don't do it. Classic example. In our world, we do a lot of podcasting, right, podcasting is great for building brands, is it great for leads, who knows it some people say it is somebody that I personally find it's better just to be able to amplify a message. Now, if my goal wasn't that if my goal wasn't to build a brand, to be known as an expert in what I do, etc, etc, my goal was something else, I would have to look at this podcasting thing and go, "Is this the thing? Or is there something better I should be doing?" And I just use that as an example because it's obviously where you know, you and I have collaborated. But that's the way you have to look at it from a business owner's perspective.
Mark Drager: About a year and a half ago, you gave me some great advice. And I've heard you actually share this advice with other people. If the idea that, and you started even your framework with sales and marketing, are you getting predictable leads, this is the how to sell more podcasts. So that's the perfect place for us to dig into things. And the advice you gave was sell, just sell, sell, sell, close deals, it's okay, it's okay to sell. It's okay for people to say I want to work with you. And then you have to put them off for you to have bandwidth a few to cap capabilities, or for you to say perfect, we'd love to work with you. But we're we can't even start for next six months or whatever it might be. Just sell, sell, sell, sell, sell. Talk to me about that. How did you learn that lesson? Why is that so important?
Nick Bradley: What actually really came down to was the idea of making an offer, which is the same concept. And the idea is for sub bids to be able to make an offer, like an offer to, you know, basically work with someone be that a product or service that you do so you have to be able to get to that position. Right? And what does that start when?
Mark Drager: You make an offer? You mean like pitch like just like, put yourself out on the ledge and say I will do this for you for X number of dollars.
Nick Bradley: Yeah. So I break it down. I think the way I define a sale is when there's money in the bank. A sale is not a yes. Okay, and that a lot of people don't do that. They they said yeah, because the money's on the bank. It's not a sale. Okay. important rule. No advise it but in general, when I say making an offer, it's the stage before the sale, of course, because you know, you've made the offer, the person hasn't even said yes yet, but you've had the opportunity to present in front of them something, a solution that's going to solve a problem for them. Okay. And if anyone's ever studied, you know, listening to this ever studied sales, you know, that it's not about the sales that you sell, it's about the activity levels. Okay, now, I'll break this down, because I think this is one of the most important lessons I ever had in sales. So if you've got let's say you're working for a company or have your own business and you have a certain number of sales that you want to achieve any week or month, don't focus on the sales, focus on your activity, focus on how many conversations you're having with prospects that give the opportunity for the sale to come. So when I used to work in sales years ago, the people who always hit their their monthly quota, their target and lots of conversations going on their activity levels was sky high. And you'd literally see the sales falling bom, bom, bom, bom that always overachieve, whereas the ones that didn't, you know, have five, five conversations, they had to hit four of them they never sold, and I reckon it's partly because they'd show up desperate, as well, because they had such few opportunities that they had to sell them otherwise they were they were dead. And so when I talk about making offers, I think you've got to do everything you possibly can to give yourself the chance to make as many offers as you possibly can to get to your outcome. So I even said to my team this morning, I said, How many offers are we making today? I know I've got three calls that are effectively sales calls in my diary, how many of you got, oh, no, no, no, we need to be making five offices out right now for a campaign that we're running. Right? If it goes two or three days, well, that's not happening. I know, we're not gonna hit our numbers. That's what I mean by sales. So sell, sell, sell. So it's not just the selling, but it's the it's the game back to the precision, it's getting the mechanism, right, so that you have the ability to sell. And if you have that at enough scale, you'll get the outcome.
Mark Drager: I worked when I was really, really young, but one of my first kind of corporate jobs, I worked at a franchise and in franchise development, development, marketing, and so we generated leads for a sales team of 200 people on the phone, who sold franchises in 90 territories around the world. They were working 10s of 1000s of leads, you know, and they were working them and each it was one of these like high-pressure sales floor type things where was commissioned only in every quarter, the leadership would get everyone together for a breakfast meeting and they would hand out the commission checks in front of everyone. And they would say this person got a 10 grand bonus. This person got a 30 grand bonus and this one guy got called up like four times. I think he got handed like 120k that day. And young guy. They said what's the secret? And I always remember this, this was this was in 2005. And I still remember it. He said, I just opened files. My job is just to have the conversation to open the file and then he doesn't close anything because it was a multi-step process. He just his job is just Oh When the files and hand them off, but other people close them open the files, hand them off. And no one really understood what he was talking about. But But it's so perfectly described what you're talking about, which is, which is, which is just your job is just to open the conversation and move it to the next step and just keep moving it forward. And that's all he did. And he did really well.
Nick Bradley: There's another way, someone mentioned this summit a few years back, is that your goal should be to get as many "no"s as you possibly can.
Mark Drager: I hate that one. But But yeah, gold node nodes are awesome. When people say no to me, I'm like, love it. Thank you so much. I don't have to waste my time with you. And even worse, just
Nick Bradley: The discipline of the offer, though, if you go back to what I said about making offers, it's the discipline of the offer. If no is great, because you actually had the opportunity to get someone to consider it. Yes, it's better, of course. But you know, if you don't even get a no means you're not getting getting it in front of people. And I think people make everything about marketing and sales over complex. And they focus on things that don't really matter, right. And, you know, the assets are important, you've got to have the right assets, you've got to have the right ways of building attention and visibility, as I mentioned before, and all those things are important. But you've got to take people to a logical position where you have that opportunity to make the offer, right. And if you don't do that you're never gonna sell anything.
Mark Drager: Nick, last question for you. I end every episode this way, what would be your number one tip number one strategy for us to sell more.
Nick Bradley: The most important thing in my opinion is to be more I've said it a few times on this is to be more visible. Okay, if you're not visible, you ain't gonna sell anything. So it's the very top of that funnel. How do you get more visible? There's multiple ways so I won't solve that problem for people today. But if you're not visible, you can't sell anything. So you got to do that.