How an Exit Strategy Transforms Your Business Efficiency and Value

In this reaction, Matt discusses why always having an exit strategy in mind—whether or not you plan to sell your business soon—is crucial for running a successful company. Approaching your business with a mindset focused on eventual sale leads to better efficiency, profitability, and systemization. It helps you view the business from an outsider’s perspective, making decisions that maximize its value, not just for today but for future growth. Even if you never sell, planning for an exit keeps you from getting too personally attached, leading to better decision-making and a healthier business overall.

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

Video Transcript:

Business Advice Video:

I’m usually asked, when should you consider an exit strategy? And I always say, the moment you start your business. Because an exit strategy needs a lot of preparation, needs history, needs credibility. and needs convincing of the buyer or the investor that this is a business that I like, it’s proven to work, and it’ll continue to strive in the future.

Matt’s Review:

I would generally agree. I think if you always run your business as if you might decide to sell it in the next couple of months, you will run it very differently than if you run it as if you’re gonna have it for the next 10 years. Running it with a mind towards exit, with the idea of exiting, means you run it more efficiently, more optimized, you’re focused on profitability, you’re focused on growth, and you’re putting systems and processes in place that a buyer would appreciate and would allow someone else take over and run for you. Now, that doesn’t mean you have to sell it now or even in the next 10 years, but thinking about the business from an outside standpoint, and I wrote a newsletter on this recently, how do you know if your baby’s ugly? Well, ask somebody who’s gonna buy your business what they think of your business, and you’re gonna hear a lot of more negative things than you might realize that you would otherwise think were downsides to your business. If you’re thinking about selling, you’re thinking about outside value, you’re thinking about how somebody might perceive it if they were going to take it over from you. It’s a different way of looking at your business. It doesn’t mean you have to change everything. It doesn’t mean you have to cater to only what a buyer would want. But it does mean that thinking about an exit starts way before the day you decide you’re just so burned out and so tired of your business that you’re willing to get rid of it. Because if you do it that way, one, you may not find any buyers, or two, if you do, you’re gonna get a really low price for the business, versus if you plan ahead, plan for an exit, plan for maximizing that value, you can do much more, even with six months or 12 months of runway, you know, if you really think about it from the very beginning that way, then you should always be prepared to sell the business if you decided to do that. It’s just gonna make the business overall a much better run business. It also means you’re not so tied up in your identity, you’re not the business, the business isn’t you. If you’re thinking about selling it, it means you could sell it, you could separate yourself from your business and the business doesn’t become your identity. I think in a lot of ways when somebody’s business is who they are, they no longer are making good decisions. They get defensive when customers get mad or say hey you should do this instead of that or this didn’t work out well. They get defensive. They take it personally. They feel like hey you’re insulting me instead of thinking about no there is room for improvement in this business. It’s just the business. They’re not insulting me. They’re just giving me suggestions on how my customers in general might appreciate doing business with me more or might like the process better or something. So if you think about selling your business, it separates you from your business. It lets you think about how to maximize value and run things more efficiently and be more profitable, and those are all good things as far as I’m concerned. Those are all things you should be thinking about anyway, so if it takes putting it in that framework of thinking about an exit to get there, then that is a positive.