Why Putting You Name on Your Business Could Hurt Your Exit Strategy
In this video, Matt reacts to a great piece of advice about building a business that’s not tied to your personal brand. While having your name and face associated with your business might feel great at first, it can actually hurt your ability to scale and sell. If your business is reliant on you, it can be hard to find buyers and may lower the value of your company when it’s time to exit. Instead, focus on building strong systems, a capable team, and a transferable brand. By planning ahead, even if you’re not thinking about selling right away, you make your business more scalable and valuable in the long run. This advice applies whether you’re running a small business or building something bigger.
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 sold my startup for $25 million in cash to a public company, and my name wasn’t even in the damn press release. And I’m going to tell you why that’s a good thing. So many entrepreneurs are intertwined with their company’s brands. In the early days, this can be an asset because customers love having access to the founders. But did you know that being the face of your company can make scaling and selling your business a lot harder and even hurt your valuation? Because potential buyers are looking for three things. One, can the business run without you? Two, are your systems, processes, and team rock solid? And three, when you leave the company, can someone else step in and crush it? Here’s an idea. Start building your business as if you’re planning to sell it, even if you’re not. What does this look like? Document everything. Create standard operating procedures. Build a killer team that can run the business without you. and develop transferable brand assets.
Matt’s Review:
I think this is overall great advice. It doesn’t really help your business to have your name on the front of it, and in a lot of ways, it can hurt your business. If you’re a business buyer and you’re thinking about buying Joe Smith Plumbing or Amazing Plumbing Services, the downside of buying Joe Smith Plumbing is that people might ask if you’re Joe, or where is Joe, or can I talk to Joe, or Joe’s name’s on the door, why am I not dealing with Joe? It can be very hard if Joe’s retired and people are still expecting to talk to him and it’s all based around his name. This is even harder if it’s a brand where the person really is the personality, the brand itself. Like any kind of business where you know you’re an influencer or something and people get to know you and develop a relationship in their minds at least with you as the influencer, as the brand, the face of the brand, and now you want to sell it and you’re not going to be involved anymore, what is the buyer actually getting? So I think it’s much better to not put your name on the business and not make yourself the centerpiece of the business. To have a team, to have a brand that is not faceless maybe, but the face isn’t somebody who is tied to the ownership and wouldn’t be able to transfer. So it could be more of an avatar or an advertising marketing image rather than the actual owner of the business. So I think this is all good advice and I do think generally speaking, if you always think about if I was to sell this business, what would be some of the hang-ups or the problems that would cause the value to not be as high as it could be? Having your name in the business or you personally associated with the success of the business is going to make it much harder to sell and move on. Tony Robbins, for example, although he doesn’t teach all of his seminars and he’s got all kinds of books and you know intellectual property that he can sell, at the end of the day, people are coming because of Tony Robbins. So when he’s not anymore when he’s retired and not producing seminars, not producing content and books, it’s going to be challenging for that brand to live on in the same way without that person behind it. So the same thing applies to a much smaller business. You’re not Tony Robbins, but still if your name and face are associated with your business, it’s going to hurt the value ultimately when you want to sell. So thinking about that from the early days is going to be to your benefit.
