You start a business… you run it successfully for decades. But, asks Molly Grubb, what’s your exit strategy?
The nightmare scenario – you get to the end and don’t have a sellable business or one you can pass on to the next generation.
Molly helps people avoid that situation.
Try this exercise: If you took a two-week vacation with no contact with your business… what would happen?
If the prospect has you running scared… you won’t be able to sell. But Molly has some solid tips for creating an exit plan, which you should be working on right now.
We talk about…
How to minimize your tax obligation when selling your business
Avoiding tasks that waste time and suck energy
Solving the two problems business owners struggle with most
A painless process for delegating
Listen to Steve Gordon and Scott Beebe Now:
00:11 Steve introduces the Dynasty Builder, Molly Grubb. Molly is one of only a few certified business exit consultants and can help you plan your exit strategy.
01:57 Molly explains the heartfelt story that led her to do what she does today.
06:14 Molly talks about being a recovering actuary and how she moved into business.
09:35 Molly talks about systems and delegation.
12:28 Molly helps us understand how to plan our exit strategy.
15:33 Molly tells us to quit being so in love with our bank accounts.
17:32 Molly explains why most business exits fail, emotional attachment.
20:19 Molly explains her how her business focuses on the owner rather than the business. Molly explains how she helps quarterback your exit.
25:10 Molly talks about the two major issues with exits...tax and insurance.
26:53 Molly tells us about her book, Build Your Dynasty, and the 4 things it will do for you.
28:23 Molly talks about the utilities on her resource page.
Mentioned in this Episode:
- Build Your Dynasty
Episode Transcript: Steve Gordon interviews Molly Grubb:
Welcome to the Unstoppable CEO Podcast. I'm your host, Steve Gordon, and I’ve got to tell you we're going to have an interesting interview today. I've got Molly Grubb on the line with me. She is a dynasty builder. And if you've owned a business now for a few years and maybe you're thinking about what you're going to do next and how you're going to turn the business into your big payday, at the end of the line, this interview is for you. She's just an expert at helping plan exits for business owners.
And so, Molly's story, which I think she'll probably get into, is that she saw her family's business really torn away from her parents and watched them kind of lose their identity and walked away with almost nothing. And she decided she wasn't going to let that happen to other entrepreneurs and other family business owners.
Now she helps build, protect and maintain a family business owner's dynasty. And she's one of only 200 certified business exit consultants. Less than seven percent of advisors have that designation, and she really will help you utilize all the fundamentals of wealth management to prepare for your business payday.
So, welcome Molly. Great to have you on the Unstoppable CEO.
I am super excited about helping your audience continue to do great things and be even a bigger success than what they already are now.
Well, I know they like to hear that. And, I have to tell you, this is an important topic and we'll get into all the reasons why in a few minutes. But before we get into the details, I always like for people to get a little sense of where you came from, how'd you get to being an expert at business exits?
Sure. Well, you gave me a little bit of my bio, but really I'm a recovering actuary, that's what I went to school for, but what I do is not really as exciting that I'm told as to why I do it. Who we focus on is the story of my family, you know, losing their business, because they didn't work the people they knew. They worked with the people they knew versus the experts they actually needed, and they treated their exit as a transaction rather than a process.
But, the reason why I do what I do, it goes back even further. I'm the youngest of six kids, and when my sister was two years old, she was diagnosed with a rare blood disorder. And for four years my family invested all of their resources, everything they had from their business to help Mandy get better. So just imagine what you would be thinking if you poured your blood, sweat and tears into your loved one to get them better and nothing's working. And even worse, they were told they weren't going to make it. That's precisely what was told to my parents. And I sat there in the hospital room as a young four year old, trying to understand what those words really, really meant.
So, my parents did the only thing that they knew to do. And, they took her to church and over a thousand people prayed for Mandy that evening. You know, the next time they took Mandy to the doctor, what the doctor said, she didn't need any more blood transfusions. She didn't need any more treatments. She had been completely healed, I mean it was truly, truly a miracle. Then just imagine you had this amazing miracle happen to you, and you still needed one more.
You see the four years of investing in my sister's health, combined with the insurance defaulting on my family, we were going to lose everything, our home, all six of us kids were going to be split up. A story about our situation was picked up by a local news channel, and the night that it aired, a local business owner named Bill was so touched by it, that he went to the sheriff auction and bought that house back for us. He even drove in a brand new blue minivan, stuffed with three Mickey Mouse's for my oldest brothers, and three Minnie Mouse's for us girls. He handed the keys to my dad and said we're going to Disney World on his private jet.
Wow. That's exactly why I build dynasties. It's because when my parents could not build their own dynasty, Bill took the time to be able to do that. And so, I want to be able to empower others to protect their family from that type of situation, but also to be able to help others and be empowered by that. And that's truly why I do what I do.
It's a powerful story. And, I think it, it really illustrates the power of owning a business, what you can do, if you build it the right way.
Because Bill built a business that provided him with means, he was able to come in and do something very generous. And, I'm not naïve enough to say everybody aspires to that, but I think an awful lot of the people who are listening today, the kind of people we attract, aspire to building that kind of business.
And I love that you call them dynasties, because I think they really can be.
Absolutely. Why not? Why can't you have your own dynasty?
Yeah, absolutely. So, you have this experience in your background and at a very young age too, and then you go off and you get into business. And so, what did that look like? What was sort of the first place that you started and then how did you end up doing what you're doing?
Sure. Well, I was a recovering actuary, I did that for a couple of years, but again, I just had this internal calling that I needed to actually be able to talk to people. And if you know any actuaries, the communication department may not be one of their fortes. So ...
I love that you call yourself a recovering actuary.
Yeah, who else?
I call myself a recovering engineer. Same problem, right?
**And you can't talk to people either. So-
We were the ones that could talk to the humans.
Right. Yeah. So, about 10 years ago I believe, yeah, it was about 10 years ago, I broke off and went into the planning industry and I tested my model out for about four years at two different banks and became the top advisor in both of those banks, Nationwide. I was the top producing advisor, so at that point I'm like, "Okay. I now have a pilot that I can generate it and have it be my own." And I cultivated the clients and nurtured them in a way that it would be a natural transition. So I, it would still make my non-compete and everything would be still be compliant. So I wasn't totally starting from ground zero.
But it was really, when I truly left and formed my own firm, it was a pretty dry well. And so, there was a couple of things that are going with me, because I had those relationships in place. I then began to just try to spread the wings. We used ... I did a ton of speaking, a ton of event planning, and went around and helped a lot of displaced workers, and it was really just working with the masses, at a certain point, and became extremely successful to the point that last year we broke off from our independent broker dealer, sold 70% of our firm, so those clients could still be managed, but it allowed us to just focus on family business owners. Which obviously has a very personal spot in my heart, to really be able to just focus on that and help them prepare and transition over this thing that they created.
Whether it's maybe a situation like I am now, where I just needed to realign the focus of our business, or maybe it's I need to start thinking about giving it to the next generation, or I want to work on a new project. So that's kind of what's led our success, but really it's about, what it's allowed to expedite was, all the systems and delegation that we created and made apps ... I mean because you have to practice what you preach if you're going to advise business owners, you got to act and think like the model business owner. And, that's been kind of the core belief system in our firm.
Thank you. I love that. We believe the same thing. We see so many people in our world, in marketing that they'll say one thing but they're doing something different and, you know, we have from the very start made sure we were also kind of eating our own dog food, I love that you do that.
Overcome Your Two Major Business Pain Points
You mentioned two things there. Systems and delegation. In my experience, those are the two things that business owners struggle with the most.
How do you get them to overcome it?
Well, actually in my upcoming book Build Your Dynasty, that you can sign up for on Grubbwealth.com/unstoppable. But in that book, what I say in there is that, the success or failure of any business is their ability to create systems and to be able to delegate. If not, you're going to be that E-Myth version of just constantly wearing 10 different hats and not being ... If you're in the service business industry, you end up just serving business owners, but you don't act like a business owner. So, it's just being able to really operate and not be a practitioner of your business, and actually think and act like an owner, and have the business serve you, rather than you serving the business.
It sounds so enticing. We all, whether you call it work in the business or work on the business rather than in the business, or have the business serve you rather than you serve it. It sounds so enticing. And it's easier said than done. And, I want to dive into that a little bit more.
Before we do that, I want to take a quick break. We're going to be back with more from Molly. And we're going to talk about how you can set up your business for a successful exit. And I’ve got to tell you, I've seen lots of businesses that had really unsuccessful exits and were really not helping that business owner achieve their goals at the end.
So, we're going to talk when we come back about how you can fix that, how you can plan ahead for that.
We'll be right back with more from Molly Grubb.
Welcome back to the Unstoppable CEO Podcast. This is Steve Gordon and I'm here talking with Molly Grubb. And Molly, we left off and you talked about this idea of having the business serve you. And, you know, we hear that a lot and I think sometimes it is a really difficult thing for business owners to be able to do. And I'd love to lean on your wisdom, as you've taken business owners through that process.
Can Your Business Survive Without You?
Sure. Well, that's a fantastic question and lead in, because so many ... A good exercise for business owners is to go on a two week vacation, away from the business, have zero access to it. What's going to happen to that business? Are you going to lose money, is the company going to fold up, or is it going to run seamlessly and the revenue still be generated? And if you can't be the latter, then you need to start really just setting down and creating a mind map for yourself. And start, just start grading what you're doing. You can use resources like Toggl, T-O-G-G-L, which again is on the resource page on Grubbwealth.com/unstoppable.
Those type of resources, you can then start measuring your task of what you're doing and then at a certain point, you need to then calculate what is my true hourly rate? So many business owners, they just don't even, they pay themselves a salary, but that's not really what their true hourly rate is. And then once you're able to calculate that, then it becomes very clear as to what you need to delegate. And then don't just stop with you, all of your employees, anybody that supports you, need to do the same exercise. Because, it's, you know, especially if in the service industry, there are so many individuals out there that they don't have an appointment calendar, they don't have a reminder calendar, so they're constantly chasing their appointments.
And, it's just so time consuming and they pay their secretary too much to just do what a system can do for you. So, we use things like Acquityscheduling.com and Remindercall.com to basically funnel all this and allow us to run faster, because that's the name of the game, it's how fast you can run.
And, you know, things like InfusionSoft, so all of our leads are funneling through there, they're getting an automated drips campaign, and for us to just even like book a stage, a week that we're doing, that would normally take four or five hours for most, and for entire week, it takes us 20% of that time to do. And so, that's exactly, the name of the game on no matter what industry you are a part of.
Yeah. I think, you know, figuring out what it is that you're doing, that you can begin to get off your plate and begin to systematize is really the first step. I've had people tell me over the years, you’ve got to do it, a timed inventory, you know, where you carry a list around for two weeks and write down everything you do. And I've never been able to do those. But, I have found that I get about 80% of the result from just sitting down periodically with a cup of coffee or, you know, better maybe a good bourbon and-
And just making a list of, "Okay, what do I think I did over the last week or two?" And sometimes that's the short cut.
Oh, yeah. Absolutely.
You're doing stuff that totally irritates you, because that to me, that's the first stuff you want to get off your plate, because it's usually you get the stuff that's not only taking time it's sucking the energy.
Right. I mean, do you get paid to do taxes? If the answer is no, then I'll do it.
The Tasks You Must Delegate
If you don't get paid to do payroll, then don't do it. Have someone else to do it. There's so many that can do ... Quit being so in love with what's in your bank account, because by you sharing that love with others, you'll be replaced back within an abundance, because now your time is going to go towards the two most important things that your job as an owner's to do. Make money and do things that are going to make you money. If you're doing anything else, you're losing money for your company.
Yeah, absolutely. So, the first I guess step in this is to get your business to a point that, that the team is running it. And, that's really the purpose of putting together the systems and the delegation.
**And that's also critical because, I've had business owners come to me and ask for advice around, you know, they're getting close to exit and sometimes it's hard to look at somebody and tell them, "You know what? You don't have sellable business."
Because it doesn't operate without you. And so, what are you going to do? And, if you can't get your arms wrapped around this thing, the rest of it's going to be difficult. But, let's say you've got a business owner, you've worked with them, they've gotten the thing systematized. They can go away for a month and the business, they come back, the business grows while they're gone. At that stage, what do you do next to help them kind of make that dynasty really permanent?
Sure. When it comes to exit strategies, we like to get in at least three to five years prior, to make sure that the business truly is independent of the owner. Because the more independent it is of the owner, the more the value of the business is actually driven. That seems counterintuitive, but it's a nice concept.
But, the one thing that we really like to, that we focus on, that is what is the number one reason why all business exists fall and in are just crushed, is getting the owner ready to exit from an emotional aspect. Because, I'm emotionally attached to my business. Even me, and I know that I just can't pull myself away from the business right at this point because I'm too in love with it. And you'll find that with different business owners.
So, designing an exit strategy based off of the emotional needs of that owner, so it might need to be something that's done over a five- to seven-year period, or maybe they're just absolutely just sick and tired of it, and they want out from underneath it. Or maybe they are sick and they can no longer function. So, just designing different exit strategies for them. I mean the financial gap, you know, that's very logical, we solve it to make sure that their life out post-exit is going to be the equivalent if not better than during while they owned the business. But nothing is more important than getting the owner back to their true self, getting them to have their hobbies back in place, and reprioritize them before they're even crossing that finish line, is I think just vitally important.
Yeah. I couldn't agree more. So much of this is, it's not just the money side of it, there's such a mental aspect to all of this, and an emotional one. You've built this thing, it's your baby, and now there's the part of it that you're giving up this ... I mean for most of us who built businesses who aren't in the Silicon Valley serial entrepreneur world, you've probably put your heart and soul and a good chunk of your life into building the thing and probably have some pride around that. And it's, it can be a difficult thing to let go of.
And so, as you're working with them in that three to five years prior to the exit, is there a process you take them through, like a series of steps that you look at to get them ready?
Absolutely. The first, you know, don't tell Mr. Compliance Man this, but the way we really describe the process, is that, we're kind of the insurance that you take out before you go to talk to any sharks. Because if you go to ESOP attorney, you're going to get an ESOP, if you go to an investment banker, you're going to end up selling your business. And I'm not saying any of those are right or wrong answers, but again we’ve got to go back to the owner. No one focuses on the owner, everyone just focuses on the business.
And so, the process that, you know, you as an owner really need to go through, is to sit down with someone that can quarterback and has really no direct transactional attention or conflict of interest let's say, towards that exit. And, be able to really just assess you and what your needs are and design that plan and that will quarterback that entire process from beginning to end, bringing in the right transactional individuals, I call them sharks, to make sure that the proper plans will actually be executed.
Reducing Your Tax Obligations During a Business Sale
So, if you choose to an ESOP, well then, you're going to get the best ESOP attorney in town. If you choose to do a Popeye plan, well, you're going to get the only attorney in the nation that does that. But it's going to be that entire process. And then we just went through that with a client that owned a car dealership. And he went to his business attorney that he's been working with for 30 years, just as my parents did, and his attorney said, "Well, why don't we just do," he wanted to give it to his, the next generation. So the attorney said, "Well, why don't you just do a 20 year note on this thing?" Well, the unfortunate thing is now my client would've been liable for this 20 year note, hoping that the next generation can really fulfill this thing. Meanwhile, all he is doing is amortizing out a 20 year tax payment to Uncle Sam, because the most expensive thing you can do is sell when you exit.
And, it's about up to 60% in taxes. So, what we did with him was just, we did a complete tax free restructure on the real estate, spun out the real estate, had the real estate be its own exit, that was tax free for them. And then, also did the same thing for ... We did a five, we did stock redemptions for the actual owner over five to seven years. So what it ended up doing was maximizing what the client got, but minimized what the employees had to pay. So it was really, it was just a home run all the way around and the attorney was even extremely ecstatic, he's never seen anything like that.
So, just being able to think outside the box for your clients just as a whole, because as business owners, that's what you need.
Yeah. I love that. There are so many ways to structure these things. And I've seen some creative stuff done in the past and you really do need someone who specializes in kind of creatively developing the exit plan. Because if you don't get that right, you're going to lose a ton of money.
I mean in all seriousness, for those of you who are listening to this, I mean I have seen mistakes made by friends of mine that have cost them seven figures. And you don't want to be there, because the damage to the ego is real when that happens, not just to the bank account. And so, you've got to find somebody that can bring some creativity to this, because the way the tax code is written, there are lots of options, and I think every business is pretty unique. I mean, you talked about real estate.
If there's real estate involved, there's all kinds of interesting things that can be done to do that. And this is all, you know, I've always said for most small businesses, oftentimes the best sale is an internal sale, but the trick is to figure out how do you get the cash out if it's an internal sale. Because oftentimes it's going to be worth more. Particularly if you haven't done ... I'd love to hear your take on this, because you see a lot of more of this than I do. But particularly if you haven't done all of the work you should have done to do the systems and kind of extract yourself, the next best operator of that business are all the people that are in it right now, most of the time, because they know how to do it, you know?
They're closest to it. And so, but you’ve got to make it something that they can actually accomplish without putting all your eggs in that basket.
Yeah. Yeah. So two cautionary tales, you know, that you need to be careful of as you're thinking about your exit is, one, what about Uncle Sam? Because he's going to, you are basically going to go to bed with him if you don't address it, 60% of taxes will be dedicated towards that, on average.
Is Your Business Advisor Qualified and Certified?
The other issue that you need worry about is if you are deciding to sell your business, now only 20% of business actually sell externally, but let's say you're part of that 20%, making sure that you're working with someone that has the proper errors and omissions insurance, as well as the proper security license. Because if you go to the closing table, and something goes wrong, and they don't have that in place, your deal could be undone. And there's a lot of business brokers out there that are representing clients that really don't have it, because it's a gray area, and it's not a very highly regulated area.
So, that's why these deals are getting done. And then, sellers are really in a bind when things don't go their way.
Yeah. And you don't want to be at the closing table trying to sort things out, because you're always going to lose in that situation. Value is always going to go down if you introduce any uncertainty into the deal. And that can be a really difficult thing.
Molly, I know you have a book coming out, and you mentioned earlier the URL, which I believe is Grubbwealth.com/unstoppable.
Tell us a little bit about the book and what people can expect.
Sure. When you're done reading the book, you will have an outline of what your dynasty looks like, or maybe the improvement if you've already built your dynasty. So, at the end of each chapter, it's going to have steps for you to execute on. So, it's going to help you design out your why, it's going to give you hacks to ... So, basically, it's going to do four things for you. And it's going to absolutely change your life. It'll help you create more time, move faster, maximize your exit and free up wealth. And that's really what encapsulates the entire book.
That's great. And I know you're still putting the finishing touches on it, but if they go to that page and they give you their email address, you'll email them when the book is available, correct?
Absolutely, yeah. They'll just go on our wait list and we're super excited about making sure that they do get this as soon as they can, because we really want to be able to help as many business owners avoid what my family had to go through, but also to be like Bill, and create their own dynasties, so they can continue to bless the world.
Awesome. And I think you mentioned before we started recording that if they go there, you've got a whole list of resources that will help business owners, everything from kind of beginning to figure out how to get the systems and the delegation in place to more advanced stuff, is all there.
Right. We have a resource page, so if you just plug in your email we'll make sure that the resource page gets emailed to you, that's really an advanced copy to our resource page that we're putting for our book, that you can just go on and ... Some of the resources I was mentioning earlier, it's all going to be on that page. So it's all on how to work faster. You know, all the systems and things that you need to, that you can utilize to help delegate and push down the work that just bogs you down and stops you from being as successful as you really want to be.
That's great. Molly, I appreciate you coming on today and investing some time with us. This is such an important topic, and we all want to push it off and not think about it. And I'll never forget I was in a CEO peer group years and years ago, and one of the first rules when you came into that group was you had to, in the first meeting explain your exit plan to the group. And I'll never forget, because my first meeting I didn't have an exit plan.
And that was the point, was to get everybody thinking about, "Okay. We built this thing or we're building this thing, how do we get out?" Because if you don't do that intentionally, you're not going to enjoy the way that you get out.
I appreciate the good work you're doing. Thank you so much for being here.
Well, I'm excited to help in your community and let's go out there and make it a great day.
Awesome. Thank you.