Small business is at the heart of the Texas Economy.
I’m going to ask you the elephant in the room question right now; do you still love running your business? And if not, do you have an Exit Strategy?
Exit Strategy is one of those things we small & medium size business owners may not have thought about before. But life happens. It could be a Pandemic, a shift in life-goals, a health issue, or just a good old-fashioned retirement – but it at some point you’ll need to ask, “What do I do with what I’ve built? Does it have a cash-out value? And does that value match the price tag someone else is be willing to pay for it?
We ask this question because whether or not we have any intention to leave our company – THIS single exercise – of planning for an exit can actually ensure that you come out of 2021 stronger, make running your business easier, set you up for being able to sell in the future or just put you back into more of a flow state for when we return to business as usual.
Episode 7 Guests:
Scott Pepper – The Magician’s Agency Theater
Bios and business information for all the guests featured in Season 1 can be found on EmergingTexasStrong.com. Find out how you can work with them and support your Texas small businesses.
This episode of Emerging Texas Strong is sponsored by Texas Mutual Insurance Company, a leading worker’s comp provider in Texas, and is a production of Earnest Media.
EPISODE 7 TRANSCRIPT:
Texas Mutual In…: 00:00 Support for the Emerging Texas Strong podcast comes from Texas Mutual Insurance Company. A Workers’ Comp provider, committed to helping companies build a stronger, safer Texas.
Host, Linsey Li…: 00:09 On this episode of emerging Texas strong.
Dr. Stephie Alt…: 00:13 At this point in time, I’ve observed that there are a bunch of business owners asking themselves, boy, should I stay? Or should I go, should I continue my business? Or is it time to do something different? And that is a great question. I think in fairness, we should ask ourselves this question from time to time anyway, and the pandemic, we could see it as an invitation. This is a good time to ask that question.
Host, Linsey Li…: 00:41 Welcome back to Emerging Texas Strong, a growing collection of stories, lessons, and advice from small business owners in Texas, working hard to survive this pandemic economy. We follow a collection of businesses and weave their stories together. As we navigate a full season of big picture topics like what’s at stake skills for making tough decisions and opportunities for future growth. In episode seven, we cover a timeless topic. Should I stay, or should I go? I’m going to ask you the elephant in the room question right now. Do you still love running your business? And if not, do you have an exit strategy? Exit strategy is one of those things we small and medium-sized business owners may not have thought about before, but life happens. It could be a pandemic, a shift in life goals, a health issue, or just good old fashioned retirement. But at some point you’ll need to ask, what do I do with what I’ve built? Does it have a cash out value? And does that value match the price tag, someone else is willing to pay for it? We ask this question because whether or not we actually have any intention to leave our company, this single exercise of planning for an exit can actually ensure that you come out of 2021 stronger. It’s going to make running your business easier and set you up for being able to sell in the future. Or maybe just put you back into more of a flow state for when we return to business as usual. As I tackled this single question, I watched it unfurl into something much larger than I expected, and it’s too important of a topic to just gloss over parts of it. So I’m announcing right now, should I stay or should I go, is going to be a three episode journey. In part one, we ask you to get reflective. Do I have more joy or more exhaustion for running my company? And what comes next? In part two, we’ll assess your assets and find out if you were to sell your business, what do you need to have in place to make it attractive to a buyer? And we’ll talk to other owners who’ve been through the process of buying or selling an established business to hear their real life advice on the experience. And in part three, we get very clear on how approaching the question of exit strategy as an exercise and getting everything in place that you would need in order to attract a good buyer is actually the single best thing you can do to refresh your business and get ready to be leaner faster and ready for big growth in the economic recovery. So let’s get started. We bring back our favorite German ex-pat business coach, Dr. Stephie Althouse of Top-Notch CEO, based in Dallas, Texas, who we originally met in Episode 3: Skills For Making Tough Decisions. The first question we asked Dr. Stephie is how do I know when I should stay and stick it out through the hard times, or if I should close shop and move on?
Dr. Stephie Alt…: 03:38 Hi, I’m Dr. Stephie. I’m the founder and CEO of Top-Notch CEO. I’m very passionate about supporting experts in converting the brilliance into more impact and more reward for that. I’ve developed a proprietary method called Brilliance Extraction. And what that does is it literally pulls the brilliance out of someone’s brain and makes it into a system that they can use to grow and scale up the business, and also to transition the business into a new owner’s hands. First of all, I would recommend that you do some reflection, not just in your brain, but use a piece of paper and write down what you like, write down what you don’t like and write down some questions as well. So pros, cons, and questions, and then write down a bunch of options. And what I would say is write down not only two options like staying and continuing what you’re doing or quitting. If you’re doing something else, then what is that? And come up with more than one options, but really deeply reflect when you deeply reflect on paper, putting down the pros, putting down on the cons, putting down the questions. If after all that, you come to the conclusion, it’s time to change and do something different, then please do it. But even if you are continuing, it doesn’t necessarily have to be the same old way. We are constantly challenged to invent ourselves and to think of how can we do things better, or maybe even invented from the ground up, not looking at making it better from where it is right now, but perhaps ask yourself if I was just getting into this business now, what would I be doing? I think that’s a really powerful question. That will be my invitation to you.
Host, Linsey Li…: 05:33 So Step 1: Stop and assess, and ask yourself, do you still have the passion for your business or is it time to move on? But you can also ask, are there different ways that you can run this business that would help you reclaim your passion?
Dr. Stephie Alt…: 05:50 It might be fun and actually effective to look at this whole thing as a game, Oh, whole life is a game or series of games. We’re inventing the game. It’s not anything prescribed. It’s something we’re inventing. And the question is, what are you inventing? Now? You could invent a game where you grow, grow, grow, and you’re very happy with it. And you’re very impactful and you love it. And you have friends and you have the things you want, et cetera, et cetera. And it’s fabulous. Or you could invent a game where you grow, grow, grow, and you’re completely out of balance. And you sit on the last day of your life in some rocking chair, looking back at it, you have some deep regrets or, I mean, there are all these variations. So when you look at all of this as a game, ask yourself, do I like the game? Now, sometimes we play a game that we like by and large, but we enter a really tough time. Like, Oh man. I mean, sometimes this happens to us, even in the game, let’s say of marriage and we want to quit because gosh, dang it. I can’t stand it anymore. And then you have a choice, you know, do I go, do I stay? Do I change something? What just realize your business is a game. And sometimes we really approach this game like it’s life or death. And I find that when we let go of that life or death notion, we can breathe again and life gets easier. Business gets easier. And I think we tend to see more possibilities. So I think really this go, no go. It’s all an exploration of possibilities. It’s works a lot better if it’s from the place of exploring rather than being scared, even though being scared is okay, it’s an emotion that we all have and it’s not something we have to run away from. I would suggest you just acknowledge it and then dance with it, feel it, and then just keep reflecting and breathe through it and come to your conclusions about what you want to do next in your game. Don’t just give up too quickly. Don’t just follow some emotion about it. There’s no one who says your game has to be XYZ. You’re the inventor of that game.
Host, Linsey Li…: 08:40 Next let’s meet Scott Pepper of The Magicians Agency Theater in downtown San Antonio, Texas. Scott is a British ex-pat on an O-1 visa for exceptionally talented persons who has survived quite a year with his theater, as indoor spaces and theaters were shuttered. He had a tough road. He was in a conundrum because he could only legally make a living in the United States by doing magic, but also in the same conundrum because it wasn’t possible to bring people together. Scott sat down to tell me the story of how he approached his decision-making. When his ability to stay in the country was put in jeopardy by the pandemic
Scott Pepper, T…: 09:16 I’m Scott Pepper. I’m a magician. I also run The Magician’s Agency Theater in San Antonio, Texas. It’s a theater specializing in magic and variety shows for families. So the first few things I thought about when we got locked down and I knew that that was going to close was, um, first of all, am I going to lose the theater? And if I do, what can I take out of it and leave with and start fresh? So, one thing I was thinking straight away was okay. If I sold-up all the illusions, sold-up the equipment, I could probably get out of there with X amount. And that would be okay if this is how it’s going to go. That’s okay. So I knew the first thing I had to do was contact my landlord and say, “Hey, this is what’s happening. I think, you know about it. What can we do about it?” And I did that. And luckily, as I said, my landlord is almost a partner in my business. He’s a percentage partner in my business and he wants to do this and wants us to stay open because it’s best for him. He’s put a lot of effort into it as well. So he didn’t want us to, obviously we were going to close down for the time being, but he wasn’t just gonna kick us out. So he wanted to work with us to make sure we survive, which was great. One thing, luckily that I had done before that was actually had some savings. I paid off a lot of debts and whatnot. So I went into COVID with savings. And I’m like, okay, this, these are my savings. This is for me. I can live off this for a little while, if it means that we’re going to be shut down for a bit that’s, that’s not too bad. So the main thing was my visa, because if I can’t do magic, I’m going to struggle to apply for my next visa. I mean, a lot of people were getting sent home. I knew I wasn’t going to get sent home until my visa ran out, which was in January, 2021. But I also had to prove that I had work coming up in 2022 to 2024. And I started hearing horror stories about people. Um,I think it was a gold medal Olympian or something who was on a similar visa who got turned down because they just weren’t approving people. So that got me very worried because even if I did everything right, they still may say, no, I know there was also a huge backlog for green cards. So there was no chance to go down that avenue. You know, like just, I had, I, I had all these different scenarios in my head. And there was a scenario where I stayed, there was a scenario where I stayed in the the theater. And there was a scenario where I went home, sold the theater and had no idea what I was going to do. And I made peace with all of them. And that was the only thing you could do. Right. So I, you know, I have a girlfriend here, you know, and I said, “So like, if this doesn’t happen, I’m gonna have to go home. And I don’t know when I’m going to be back. And that’s just the way it is. There’s nothing that I might not be able to do about this.” So, I mean, the thought went through my head a little bit about going home and what I would do. I just tried not to dwell on it too much. Cause it was only one of the couple of two or three possible outcomes I’ve been. Yeah, I guess I’m just one of the lucky ones. I know, obviously, you know, three friends who had closed down now or kind of got out of it and uh, and sold-up and they were doing it like last minute as well. I guess they were getting kicked out, not, you know, not kicking and screaming. And so I just, I knew how grateful and lucky I was to be able to keep going,
Linsey Lindberg…: 12:30 Where were they at? What cities and States?
Scott Pepper, T…: 12:32 All in San Antonio.
Linsey Lindberg…: 12:34 Serious?
Scott Pepper, T…: 12:35 Aerial Horizons. I think she, her and her husband moved to Maine, I think, was the plan. She was going to get a job as an aerialist up there. The Roxy Theater on Callahan and then the, uh, Bexar County Stage in Camden Road, which was, uh, improv there. Jonathan moved to New York, I think.
Linsey Lindberg…: 12:54 So we lost all of those people? We lost all of those talented…
Scott Pepper, T…: 12:58 Yeah. Yeah. They’re gone. Uh, that, yeah, we lost people trying to, I mean, yeah, yeah. They just, uh, that’s it no more. Um, I mean, I’m hoping, Tina didn’t seem too worried about everything. Like, so maybe she will start up again somewhere else. Maybe they, I know some people, when they get out these kind of things, it was like, all right, well, it probably wasn’t going to work here anyway. Let’s try it a little bit, you know, cheaper next time. Or so there’s some things that being kind of blessings, you know,
Host, Linsey Li…: 13:26 If a business closes, it’s not always a bad thing, losing those entrepreneurs completely. If a person leaves the city for good is not good for the city, but simply reassessing and closing down one version of a business and readjusting the plan. In fact, make space for other opportunities, there’s room for new entrepreneurs to step in. It allows you to make your operation leaner smarter, and it keeps the cycle going, Dr. Stephie comes back and she describes another real world example of this stay or go decision-making inaction.
Dr. Stephie Alt…: 13:59 My hairdresser. He shared with me that he may have to give up his salon as we were talking about it. I realized while that sounds terrible, it may actually be a relief for him. He said that the other hairdressers who rent out a station, they haven’t been doing very well. And then they said, “Oh, I just don’t have the money to pay you.” But he still had to pay the landlord. And obviously that was very painful, but he did not want to lose the song and default on the lease and then get kicked out because he felt the responsibility, not for himself only, but also for the other hairdressers. So he’s thinking about just moving himself across the street, another place and just rent a station there himself and just proceed that way. And in fact, he’s, as it sits right now, cutting out losses. And I said to him, okay, perhaps this is not a bad thing to happen. This just gives you the room to reinvent yourself and find another place where if you want to at some point and start again with more hairdressers and start to make money on their efforts as well, when the time is right. And he said, “Well, hairdressers are funny people. They’re just not very reliable and I’m not so sure I want to do this.” So sometimes it’s just the wake up call and say, Hey, I don’t want to do this anymore.
Host, Linsey Li…: 15:37 There are two sides to every coin for every business loss there’s opportunity for someone in the future. But as I was talking to Dr. Stephie about the story of her hairdresser, what I thought about was the American mythos of eternal expansion, the idea that everything has to keep growing and that it’s a failure. If you choose that you don’t want to stay on that path any longer, the most important thing that I want to make sure that we all remember as we play this game of life, is that your self-worth is not tied to that expansion. When we come back from break, we’ll assess what a sale would look like and ask what your life would look like. If you were to step back from running your business. Stay with us.
Texas Mutual In…: 16:19 Support for this program comes from Texas Mutual Insurance Company, a safety-focused Workers’ Comp provider, supplying information and resources that can help Texas employers stop accidents before they happen firstname.lastname@example.org.
Host, Linsey Li…: 16:35 And now back to our show. How to get started on this exit strategy exercise, Dr. Stephie of top-notch CEO gets us started by asking the right question.
Dr. Stephie Alt…: 16:46 Let’s say you have decided after some reflection that you want to sell your business, then let’s talk about, can you sell your business or what will it take so that you can sell your business? First off, of course you have to ask yourself, what do I need to get out of it to make it even worth it? That’s one, in my observation, one of the biggest hurdles to selling a business is that the business is completely dependent or very hugely dependent on the business owner. And in those cases, they most likely cannot sell, or at least they cannot sell without staying on for at least a year, if not two or three. And what often happens is when someone stays on, they hate it. They wanted to sell the business because they wanted to get out of the business. And now they have another owner tells them what to do. A lot of people don’t like that. Therefore, what really needs to happen is to transfer somehow this knowledge from the person’s head into a system or to some people, but it’s better to train people, but train it also into a system, put it into a system. That’s what we do with brilliance extraction, but to make the business even transferrable. And, and also you have to be pretty much best in class or close to it because there are a lot of businesses for sale. There’s a lot of business owners who are thinking about, okay, you know what? I don’t want to go through this again. And I was close to the point of retiring. Anyway, I’m a baby boomer. You know, they have to think at some point about how to get out of their business, how to transfer it because none of us live forever. And frankly, a lot of people are forced by external circumstances to leave the business, which is really not the preferable way. Then the pandemic might give you a different kind of push, right? You say, well, shoot, I really need to prepare now. I don’t want to be somebody who’s being pushed. I want to go on my own terms. But the truth is many business owners are not positioned to go on their own terms at least half a forced out of the business by external circumstances that, that health, that health of a loved one or a dispute with their business partner, et cetera, et cetera,
Host, Linsey Li…: 19:20 Scott Pepper, The Magicians Agency Theater, on cutting your loss and also on cutting out the fat, as he’s learned real life lessons through the recovery.
Scott Pepper, T…: 19:29 It’s sad to say, but if it’s not going to work out don’t, I mean, if it was me, I was not going to get myself into debt. I couldn’t get out of it. Wasn’t worth it. I was going to sell-up, start again from scratch somewhere else. If it just it, if it wasn’t meant to be, there’s just said some things you can’t control. So it’s that in that particular situation that I would have sold-up, take the money, took some time off and then figured out my next step. So I would say if you’re in a point where you really, really, really are struggling and you can’t see an end, see how you can get out and still, uh, be fairly happy with it. Um, but if you can see a light at the end of the tunnel, then just hold on a few more moments. Cause we’re nearly there. And, um, just look at every single way you can to cut costs, but not cut quality and try and keep that, you know, people are going to be understanding of the things are going to be different for awhile. So people are understanding that we only have 25 seats in our theater. They’re understand that we only have two people. You know, they’re understanding that we’re not doing all the, uh, extra things that we usually do, but they’re still getting that experience. And most of the time, and I think most performers, uh, can, and most business owners know this, that, um, we in our head think we know what’s perfect for the customer, but you could take away 50% of that. And the customer could still be a hundred percent happy, but in our minds it has to be absolutely perfect every single time. And it just, it doesn’t, it doesn’t. And you can kill yourself during that things that way. And I have done that for the last 10 years. And it’s not that I still don’t want perfection. I do. But I just know that, you know, people are still happy with, uh, you know, you don’t have to do everything.
Host, Linsey Li…: 21:11 Dr. Stephie explained the process of Brilliance Extraction to me as when you have a glass that’s filled to the brim with water, the glass is you and your available time, the water in the glass is all the specialized business knowledge you have in your head that is being managed by you and you alone. She explained that when you get that specialized business knowledge out of your head and onto paper and systems and processes that help you run your business more smoothly, then you’ve essentially poured out a big chunk of that water from your cup. And now you have room to fill it again and fill up your life with more things that are important to you and new experiences.
Dr. Stephie Alt…: 21:50 The business owners who are listening to this, if you’re thinking that boy, I get it. And I want to do something with this brilliance that I have realizing brilliance is all of that knowledge that I have in my brain that no one else in my organization has in its unique combination. And I want to get some of these things off my plate. I want to be able to delegate better. I want to be able to have more options for the future, whether that’s aggressive growth or transitioning the business, selling the business. I just want to explore that. Then I would invite you to contact me and we can have a chat in what I call the brilliance cafe. It’s an online virtual cafe and it’s the warm, inviting atmosphere where we can look at your brilliance. I call it the brilliance mapping. What’s your brilliance. Why does it matter? Who is it for within a few minutes to discover what is the most impactful place to start?
Scott Pepper, T…: 22:56 So once you take the job away and you just you’re left with this clean slate, you can, you can once again, do whatever you want, which is kind of exciting. And I know it’s really hard to let go of these things because we’ve worked so hard on them, right? Like it’s, it’s been like, I’ve been a magician for 28 years. So to say, Oh, well, I should give that up now. Like, okay, I’m not completely giving up, but I think that’s okay. Like we give everything up certain points. We don’t hold onto everything all the time. Like we, we get rid of cars, we sell houses. Like we don’t have to, the job, doesn’t have to be the same thing. You know, there could be so many other things out there that we enjoy doing and a good at. There was one magician, um, Eric Bus, his name is, and he is building tree houses now and they are great tree houses and he’s getting like so much business. They keep seeing them on Facebook. “Oh, this is another tree house I built”. And that could have been something that just, you know, he enjoyed doing on the side and now he gets to do it as much as he wants. So, uh, that’s kind of cool. And I think a lot of people are finding that. Um, I don’t know what to say. Someone though, who really identifies with a job and then hasn’t got it. I mean, I said, I would say take some time off and go do anything you want. That’s fun. Uh, and if you say the work is fun, fine. I know. But there were other, some things out there as well. Not just work is fun. There’s other fun things. Uh, I think, I mean, America, uh, when it comes to national parks and stuff, and obviously, cause I did this recently, it’s just get out there and go see your country. Cause it is absolutely beautiful and there is so much to see and you can do it in very little time and for very little money, go give yourself an experience of a lifetime random America, because you got to Yellowstone and Yosemite. You’re never going to forget that it’s a great place to reflect as well.
Host, Linsey Li…: 24:37 Thank you for joining us on this Episode of Emerging Texas Strong. Let’s take a second and review a few things that might be useful to you from this episode. Number 1: From time to time, every business owner should stop and answer the question. Do I still love what I’m doing? And if not, do I want to stop now? Or is there something operational I can adjust that would renew my joy and passion for the job? Number 2: This moment of reflection is going to be more than a thought in the shower. Make sure you get it written down on paper so that you can list out the pros, the cons and questions that will keep you on track and give you a point of reference for the future. Number 3: Try the exercise of looking at your life like a game, remove all the pressure and just see your business as a game where you get to set all the rules, the possibilities and the next chapters. Number 4: Your self-worth is not tied to business growth or eternal expansion. And number 5: There are things we can let go of. Let me say that again. There are things we can let go of from the extras that aren’t missed by our clients. When we cut the fat from operations to the proprietary business knowledge that we alone hold in our head, that gets in the way from us having more space to enjoy our job and our lives. Take this moment to assess where you can let go and gain more happiness and balance. If you’re enjoying this podcast or have found it useful, please share an episode with a friend. We want to grow Emerging Texas Strong as a free resource for business owners. Send it to someone who could use these lessons to be happier and healthier business owners. Join us next week for part two of our topic, Should I Stay or Should I Go, where we’ll assess your assets and find out if you were to sell your business, what do you need to have in place in order to become more attractive to a buyer? And we’ll talk to owners who’ve been through the process of buying or selling an established business to hear their real life advice on the experience. Podcast, production interviews, edits, sound design, and office snacks for the Emerging Texas Strong podcast are done by Linsey Lindberg. If you want to connect with a guest on today’s show or learn more about the Brilliance Cafe with Dr. Stephie, bios and business information for all guests featured on season one can be found on EmergingTexasStrong.com. Find out how you can work with them and support Texas small business. To share the hope, the journey, the struggles, and the advice be sure to follow like rate and subscribe to Emerging Texas Strong on the web so you can always get the latest episode directly to your phone. And if you’re enjoying the show and you want to show some love, leave a five-star review, cause it will totally help more people find us. Follow us on Facebook and LinkedIn @emergingtexasstrong or Twitter @Texasstrongpod, where I’ll be sharing some special treats from episode seven, like where to book tickets to see Scott pepper, do a show at the newly reopened Magicians Agency Theater in Alamo Plaza. Some of Dr Stephie’s YouTube clips working with small and medium sized business owners and some suggestions of great Texas travel experiences. So you can find some space for joy and reflection per Scott Pepper’s recommendation, all mentioned in today’s show. And if you’d like to be interviewed, please reach out email@example.com. Emerging Texas Strong is a production of Earnest Media. If you are interested in sponsoring a heartful podcast, focused on the journey of Texas business owners for focus market audience, we would love that email us firstname.lastname@example.org. Remember, you’ve got a friend somewhere in Texas, who’s rooting for you. I’m your host, Linsey Lindberg. Join us next time for more stories of Texas small business on Emerging Texas Strong.
Linsey Lindberg…: 28:29 Awesome. Awesome. Okay. Do you have any advice that you would like to tell…
Scott Pepper, T…: 28:34 No, no. No advice for anyone. Ever.
Linsey Lindberg…: 28:40 We should just end this.
Scott Pepper, T…: 28:43 Don’t listen to my advice. There we go. That would be a good one.
Texas Mutual Co…: 28:47 Support for the Emerging Texas Strong podcast comes from Texas Mutual Insurance Company, a Workers’ Comp provider committed to helping companies build a stronger, safer Texas.