Richard Shaull on the Third Option for Business Owners: Exit Without Selling

Transcript

Travis Stoliker: I am joined by Richard Shaull, the author of Exit Without Selling, Build a Dream Team, Keep Your Business, and Get Your Life Back. Thank you for joining us, Richard. Can you tell us a bit about yourself?

Richard Shaull: Yeah, what's there to know, man? I'm a husband of one wife, two businesses, and three kids. Not a husband to two businesses.

That was a funny way to say that. Anyways, I have three kids. I pick it up what you're putting down.

Yeah, I got three daughters. Two businesses, one wife, and my life is full. We've got an amazing business called Exit Without Selling, and that's why we wrote the book.

Travis Stoliker: Excellent. So, you were walking me through, obviously, we are very fortunate to actually be in the same general city, which is very unusual for these conversations, so we've actually had breakfast and kind of kept in touch, so it's been great to get to know you better. Can you tell me, or tell the listener more, about your book and this powerful idea of this third option for business owners?

Richard Shaull: Yeah, well, to step back a little bit, there's this phenomenon going on in the US, especially right now, called the Silver Tsunami, and essentially, there are, I can't remember the numbers, but it's an insane number, there's 10,000 baby boomer business owners who are retiring every day. There's millions and millions of them trying to retire over the next five years. It's the largest transfer of wealth and business ownership, at least ever in American recorded history, and the crazy part, when you dig into the statistics, like I did a couple years ago, is that over 80% of those business owners have no exit or succession plan, meaning they don't really know what they're going to do, and I've even found with owners who aren't close to retirement, a lot of them are tired, they've been doing this for a long time, sometimes decades, they may have the aspiration to go start something else, or maybe they just want to spend more time with their kids while they'll stir around, and yet they're stuck, right?

They're stuck, why? Because the business depends on them. They've become what we call the chief everything officer in their business, and it's not because they're not successful, they are.

Many of these business owners have a successful business, they're making good money, but that money stops, and that success will screech to a halt if they're gone from their business for more than a month or two, right? And so this is what we call owner dependence, and it's a huge problem that's facing the vast majority of successful business owners. So you're a business owner, and you go, man, I'm sick of this, I want to change something, I want to exit, or I want to do something different.

Well, historically, most people think there's only two options. They either can sell their business, which is one option, or they can shut it down. Now let's talk about those two options and why they're actually not very great options for a lot of business owners.

For business owners who want to sell, the reality is the vast majority of them can't. I think the statistics say that only 20% of businesses that ever get listed for sale even get an offer, right? So that means out of all the businesses that ever get listed for sale, only 20% ever receive a single offer, right, so one out of five.

And then, even if they do sell, most owners are pretty unhappy, even just financially, with the outcome, right? So unless you're running a business that's got an independent management team that doesn't depend on the founder, once taxes and attorneys and the M&A people are all done with it, whatever check you got, whatever your multiple was, you're gonna probably end up with 50%. Just cut that number right in half.

And I've also talked to so many owners who, they did a study one time on thousands of owners who had sold their business, and the number was over three in four stated that one year after the sale, they profoundly regretted selling their business. Profoundly regretted, which is mind-boggling, right? So there's just this whole narrative, I think, that entrepreneurs have been fed, mostly by investors and private equity, that the pinnacle of success as an entrepreneur is to sell your business.

And just most of the people I've talked to, that was not the pinnacle for them. In fact, a lot of them really found kind of a void of purpose and identity after the sale, and the ones that didn't were usually those who were already clear on what they were exiting to in the first place. And so, again, I'm not opposed to selling, I own a business that acquires businesses.

I am opposed to owners believing that it's the only option, or in some cases, the best option for them that actually leads to them feeling fulfilled. Then you look at shutting it down, well, who wants to do that? You give up your income, and golly, you've bled for this thing, you've slogged for years, now you're just gonna let it just die and disappear, and there's no transcendence, there's no continuity, there's no reward for all the years you poured in.

What a terrible, terrible reward and end. And again, this is where a lot of owners are stuck because they think those are the only two options. But the book introduces a revolutionary third option, right, that we call exit without selling.

Travis Stoliker: Can you go into those first chapters and kind of explain a bit more? And I wonder too, before you do that, it does seem like in this new culture, it's almost like the number of times you sell is almost like, it's like a scorecard. But I know a lot of people who talk about selling, and to your point, they're not happy with the outcome, or financially it wasn't a big win.

The number that you pointed out, I think, is super on the nose. A lot of businesses only trade for like three times seller discretionary earnings. So it's like three years of income, and you take the taxes out, all the fees out of that, it's only like a year and a half.

So what do you do after that year and a half? And a lot of people don't talk about that. You're basically just back to getting a job, if that's the case.

Richard Shaull: Very true, right? And I've heard that story a thousand times. You're exactly right.

And I think this is where, again, that narrative that the scoreboard is how many exits you've had, it really serves two groups primarily. It serves venture capitalists and private equity. And again, I'm not opposed to those guys.

I have friends in both those realms. You just have to recognize that they're playing a very specific game, and you have to decide if you want to be part of that game. And of course, if you're a VC-backed company, and you're scaling to the moon, that's just kind of the road.

But for the vast majority of business owners in the US, they didn't actually really start their business to sell. If they reflect on it, some of them started it because they wanted to have freedom. Some of them wanted to have something to pass to their kids.

Some of them just wanted to make an impact in the lives of others. And those reasons don't go away after the sale. In fact, in many cases, they're violated by a sale.

And so I think it's important for owners to really think through, what do they actually want? What's the real outcome that they're aiming for, not one that's given to them by some external investor.

Travis Stoliker: And how does the personal identity sabotage us in there? I love when you were talking about that before we started.

Richard Shaull: Yeah, so in chapter one of the book, let's just say you're an owner, and you say, all right, I'm in. I want to exit without selling. That sounds great.

What the heck do I do? Well, I honestly think about my own journey here. And I remember a day, man, where I literally came into my house, avoided my wife, snuck into my spare room office, shut the door, and literally dropped on my knees and cried out to God for help in the corner.

And why did I do that? Well, I did it because my business was a nightmare. It was a train wreck at that point.

We were making money, but it just felt like the more I worked, the reward for work was more hard work. And it was just grind, grind, grind, day after day, solve problems, deal with people, deal with angry investors, deal with angry contractors. And I finally just got to the point where I was like, what am I doing with my life?

This is not how I want to live, especially when you've been doing that for years upon years, in some cases, decades upon decades. When I really look back and reflect on what had I done to get there, to become chief everything officer in my own business, the fascinating insight that I would say is I primarily did not have a tactical or strategic issue, which is what most people would say. You're bad at delegating, or you didn't hire the right people.

But the root issue was me, me, my identity, right? Let me explain this in a way that a lot of people can understand. So as owners, we have psychological needs.

We all have junk, right, from our past. And we all have strategies to meet those psychological needs, whether we realize it or not. For some of us, the strategy is become so damn good at what you do that no one can ever replace you, right?

And if somebody else does threaten that role, you can logically be trying to delegate to that person and subconsciously be sabotaging the process the whole time, because you need to be needed in that role. And your subconscious does not know how to deal with the loss of that identity, the loss of the value that being the guy who can be the rainmaker for your company provides. And this is where, you know, we start to get into what I talk about in the first chapter, which is all owners have what we call two egoic anchors.

We have the need to be needed and the need to control. And these egoic anchors are not bad. They actually in some ways got you where you are.

They're also the very same things that if you leave them, you leave your anchors stationed in the same place, they're going to keep you exactly where you are, no matter what tactics or strategy you deploy. And this is, again, what I've heard from owners so many times, they've tried so many things. They've tried EOS and they've tried writing SOPs and they've tried whatever consulting program or course or, you know, book, something like this.

And they always seem to kind of just circle the wagons and then back up in the same place. And my, you know, if I again go back to it, the root of that is you tried to change a lot of external things without first actually looking inward and recognizing that at the end of the day, I was the I'll just say for me and my company, I was the bottleneck. I was the issue.

It was my leadership. It was my it was the fact that I had built my company around me because I needed to be needed and I needed to control. And that was exactly what was keeping me stuck where I was.

I was chief everything officer. And so the first step in the process is you have to quit being chief everything officer. And the first chapter walks through some pretty intense work you have to do to change some of your identity, your belief systems.

And ultimately, you have to get a hold of a vision of yourself or a future version of yourself and a vision for your business that is more compelling than the current one. And that meets those same psychological needs, but in a new way that actually serves you getting to your goal instead of keeping you stuck where you are.

Travis Stoliker: I love the title of your book. It's it's perfect. And it's so descriptive in just those three words.

How do you use this book in your practice? How is this book the how is this book a part of your whole mission here?

Richard Shaull: Yeah, I mean, it's a really key piece. It's probably the first touch point for many of our clients. So we we use it pretty extensively in marketing.

We run what is traditionally called a book funnel, meaning people purchase the book. And by purchasing the book, we then have the opportunity to nurture them and help them understand the core concepts of exit without selling. And for the right ones who are ready to get more one to one help work with them one to one through our consulting offer, which we call the exit without selling copilot.

So, yes, it's a pivotal piece to everything we do. And it's been a it's been a massive driver for our growth, which has been pretty it's been pretty cool to see.

Travis Stoliker: You've had some examples where you've given a book to somebody and then or they even purchased a book and then years later they become clients. How do you how do you nurture that? I mean, you've you've alluded to it a little bit there, but that is something that is hard for some authors to recognize.

You know, one of the things we see all the time is people over index on their launch. It's all in some of that blame is on us. We put so much focus on launch activity, getting the reviews and making sure your bestseller, all of that activity.

But it's books are a long game, right? Mm hmm.

Richard Shaull: Yeah, I think you're right. It is a long game. And I think like a lot of things in business, it's kind of like golf.

You got to play the long game and the short game well to win. And I would say the same is true of the book. So you got to do a good job with the launch.

We definitely put quite a bit of effort and energy into that. But I think that I had somebody tell me one time this might number might seem intimidating to some, but to me it was a really compelling goal, which who was this Joseph, Joseph Young, he wrote, I think the number one self published book in like the last couple of years, they sold millions and millions of copies. I can't remember the name of his book.

It's like, be careful what you think or something like that. He said one time he did a study on this and he, he said. It basically takes about 20 to 30,000 copies out in the wild before a book will literally catch its own organic traction.

So I think for us, we just set kind of a longterm goal of like, not just at the launch, but within the first, you know, one to two years, how can we get 30,000 copies of the book out there? And, you know, somebody goes, how do you sell 30,000 copies? Well, we run a lot of paid advertising.

We sell it on Amazon. We run ads on Amazon, but we also give the book away. So we, we have outbound campaigns to our perfect, what we would call our perfect patron where we're just offering to ship them the book for free, right.

To give them the book for free. It's like, Hey, do you want this? And some people will say no.

Some people will say yes. And I know other authors who do similar strategies, but at the end of the day, I think for us, it's just been about how do we get the book in as many qualified people's hands as possible.

Travis Stoliker: That's such a good lesson for authors to learn, especially ones that are looking for the bigger movement around their book, that it's not just the immediate sales from it, it's the, you, I mean, I know from talking to you personally, this is really like a, it's a lifestyle for you. Like you really believe in this, you believe in this idea that not everybody needs to sell and that you can exit without selling. So this seems more like mission driven for you than just individual book sales.

You really, I imagine that a lot of your clients probably are, you know, friends of yours, like you're, you're, this is like, you're like proselytizing to them. You could say that.

Richard Shaull: Yeah. I, a hundred percent. It's, it's very much mission driven.

And obviously we, we somewhat have an advantage in that it's just a really pressing problem right now in our generation. I think it will always be a problem at some level, but the stakes have never been higher. I mean, if one generation of business owners, small business owners don't transition well to the next generation and private equity just gobbles up the top 10% and then, you know, tries to take all the market share left behind by the businesses that are dying.

That's not good for anyone. I can tell you that scenario doesn't go well for local economies. And so, yeah, I mean, it's, it obviously is something that we're pretty, pretty passionate about.

Travis Stoliker: What are some of the hallmark problems that you see? Like you're totally right. Most of the people, including myself that have sold companies that they really deeply cared about and had come to really tie up our identity in the company, probably too much in the way we talk about it amongst friends is there's a period of mourning, like you feel like that, that entity is dead because, you know, I, I have sold to private equity once and it is a completely different company and it is tough, you know, even right now they're going through a rebranding and they just took the signs off the building here recently.

I just drove by that and it hurt. Like it, it did feel like that part is dead. That thing that we created together was dead.

How, how do you think about that for entrepreneurs? How do you do that identity work to not be that commingled and tied up in, in something that is a business?

Richard Shaull: Yeah, I think what I would say on this is there's like a lot of things, there's a healthy part to it and then there can be an unhealthy part. So if you take an entrepreneur and you hook them up to a brain scan machine and then you put a picture of their kids in front of them and then you put a picture of the logo of their company in front of them, the same part of their brain lights up. So I mean it, it is in some ways like when they say, you know, your business is your baby.

There's a, there is a truth to that psychologically, neurologically. It's something you brought into the world. I actually don't, I don't view that primarily as unhealthy.

I think there's something about that that could be really good. The way that founders care and deeply believe in what they're doing and want to see it succeed and thrive. I think like anything, as the company matures and as you age, it can become codependent in a way that's unhealthy.

And the analogy I'd use is like, you know, if your kids are still clinging to mama's apron strings when they're 22, that's probably a problem, right? That's just, that's dysfunctional, you know? So, so I think there's a healthy way it can look.

I think as a company matures, one of the most, I think the biggest things that a founder can make a shift on is really defining what does success look like. And for some owners, it may be to eventually sell the company. That's fine.

But what does success look like? Is it passing it to the next generation? Is it seeing your team rise up and take it further than you did?

Is it elevating to more of a mentor and a board advisor role? And, and really just, as we say, sitting in your zone of genius, like what does winning look like? And then I think you do have to, and some of this is just, you know, it's not basic like hedonic treadmill stuff, but it is essentially in some ways you, in order to let go of what you're currently clenched, what you have your hands around, you have to have something better to grab onto.

And so I think for owners, if you're getting to a point in the journey where your personal attachment and your need to be needed in the business is hindering your goals and hindering the company from getting where it needs to go. I think you have to get something compelling, especially for entrepreneurs that you're going to grab hold of instead. And you have to get emotionally connected and committed to that, that new identity, that new role, that new business, that new life, and really get so committed and connected to that, that it makes it a lot easier to start to let go.

Empower a dream team here. Why? So you can exit to do that.

We call this an exit to vision. What are you exiting to? And that vision better be a hell of a lot more compelling than your current role.

And it also better satisfy how your psychological needs are met in an even better way than your current situation, or else you will find a way to protect the current schema, the current status quo, even if you do it subconsciously through self-sabotage.

Travis Stoliker: And that makes a lot of sense. What do you think about, like, especially when I own the restaurants, I would see a classic case where somebody had been running the restaurant for a long time, 20 years plus, they think they're ready. In this case, they were selling, but it was almost like they were exiting without selling because they were, in most cases, had to do seller financing.

You know, the person couldn't come up with the money or couldn't get the SBA loan. So they end up, you know, holding the note, basically financing this. And in a lot of cases, that new operator would end up failing.

And then they'd get a business back that is in a worse condition than before. So like that, that is a fear that I know a lot of my friends have. You know, one of the appealing things about selling is that I'm out of it.

I don't have to worry about it coming back to me. How do you, how do you get owners comfortable with that? Or what are the tips on how to do that in a way where you don't end up getting an asset back that is in a worse position?

How do you, how do you do that? I imagine that comes into the, all the training that you do around that person that's taking over.

Richard Shaull: Yeah, this is such a great question because I think it is probably the number one fear that owners have with the exit without selling process. And the one thing I would say is, you have to do this right, no matter which path you take, or you're going to pay the piper. So, you can put band-aids and duct tape on things, which is what most people's exit plan and solution is.

But eventually, like the dam's going to burst, like the patch is going to rip. And that's what happens, I think, in these scenarios that you said. It's like, oh, I found a buyer, like hopefully they can do it.

You know, the owner is burned out. They fantasize like, oh, I'll just finance it to them and they'll, they'll do great. And I'm off, you know, to golf or whatever.

And it almost never works out that way. Why? Because you didn't really have a plan.

You had a wish and a hope and, and then a legal agreement, which, which was very, very, very likely to end up in the situation you're talking about where it reverts back to you. I think when, when owners read the book, they'll recognize that it really comes down to the process of building a dream team who is capable of running the business profitably without you. And then what I find is most owners, they don't actually not want to work.

What they want is the freedom to not have to work and to spend the vast majority of their work time doing what they love and are great at. And so I don't think the goal in most cases is to just be an absentee owner. Hand, hand the keys off and hope, right?

I brought a second in command and hope that this works out. I think the goal is to actually build a dream team that is strong where you're weak, that allows you to spend 80% or more of your time in your zone of genius and still add value to the business, do the identity work to elevate to that mentor, you know, advisor owner role, but then you are going to have to, as we would say, weaponize your vision so that it attracts talent that you're not currently even speaking to. And that talent is going to require a new standard, a new floor for where the business can go, a growth opportunity as we would call it. So, so I think in essence, the end goal is to actually see the business, not maintain, not incrementally grow, grow.

The goal is to actually see the business grow leaps and bounds with you sitting in your zone of genius and the right people taking it to the next level, the way I like to say it is, you know, one of the most satisfying things an owner can ever experience is when their family, their kids or their successors or their team, when their ceiling becomes their team's floor, their team has just taken it to a new level.

That is, that's what I think real success looks like for a lot of owners. So again, it comes back to defining what does success look like? If you want absentee ownership, I don't, I don't know if that's actually even the most fulfilling path for most owners.

And I do think there's a little bit of a fantasy in that. If you want to build a dream team that allows you to spend 80% or more of your time in your zone of genius, the path has been mapped for that, like that, that process will work if you work it. Does that make sense?

Travis Stoliker: Yes. And I'm so glad that you said that because I think there's a very powerful illusion on, you know, Instagram and TikTok of this mailbox money that I just, you know, even on Twitter recently, it's like, I'm just going to buy this plumbing company with an SBA loan and I'm going to take it 10 X. And I just, I've been doing entrepreneurship for a long time.

I have never seen that work, this absentee owner stuff. I'm sure people have it. I'm sure some people have figured that out, but I think you're right.

I don't think it's that fulfilling. And I don't think, I haven't seen a lot of examples of that working. I just haven't seen it.

So I'm glad that you're saying that.

Richard Shaull: Yeah. That doesn't mean you can't see a measurable decrease in the amount you're working, like for, for a lot of our clients, they end up going from, you know, working 60 hours a week to working 10 to 20 hours a week, right? They're just, they're working smarter, not harder.

They're spending the vast majority of their time in their zone of genius. And they've built a dream team that can run the rest profitably.

Travis Stoliker: And especially when you're that person, like, that has thought about this problem and this set of customers for this long and really, you know, treated your company like a baby. Like that study, well, it was fascinating. I didn't know that you could actually look at your kid and your logo and see them in the same sector of your brain.

But I think even if we limited it to 10 hours of actually working, that other 30 hours, especially if this has been your passion for this long, you're probably still thinking about that. That's probably working hours, but you, like you said, you're, you're in your zone of genius. So you're not having to grind out the 60 hours.

It's that, you know, kind of overused platitude of the work on your business, not in your business. But I think that's right. That you're like, you're freeing yourself up to do the higher level thinking, getting yourself out of the grind that is really about those emotional needs to feel needed and wanted that you're identified.

I, I told, I think you're totally right on that and you're still working a lot, but it's those, like a lot of my business ideas come from shower thoughts or run thoughts that's not working, but I'm definitely working. I'm definitely working.

Richard Shaull: Well, I say it this way. You know, you're in your zone of genius when work becomes play. And I think we all want more play in our life.

What a lot of owners and entrepreneurs have never really realized is that play for them is a type of work, like real play. Like you can only play so much golf. You know what I mean?

You can only travel so much. You know, I was just talking to Cameron Herald the other day and that guy travels like an insane amount. I was on his podcast, whatever.

But even for him, he's like, you can only travel so much. Like I, there are things that I love to do because I'm good at them or because they add a lot of value or because, man, I'm just encoded by God to do that. You know, it's just natural for me.

Those are the things that I think actually bring a ton of meaning into life and purpose. And, and, you know, don't get me off on this trail, but I think the whole concept of retirement is broken for entrepreneurs anyways, the goal isn't really to retire anyways. The goal is to do meaningful work at a pace that supports health and rest and connection with the people you love and meaningful work is, it's defined really by what sits in your zone of genius.

Travis Stoliker: I just did a podcast with Cameron and he just gave a great playbook on how to get speaking opportunities and it was, it was great. He was really generous with his tips on that for other authors. Richard, this has been amazing.

Thank you so much. Where can everybody find you? Where should they follow you?

Richard Shaull: Yeah, super easy. If they want to check out anything about what we're up to, they can just go to exitwithoutselling.com. If you want to look at me and follow what I'm doing, we've got some updates coming to the site, but richardshull.com S-H-A-U-L-L for my name. And then, yeah, I mean, we're, we're, uh, in the past I've been known as a bit of a social media ghost, so I don't check those platforms that often, but we've got a team who's posting content and you can kind of keep up with what we're up to.

Travis Stoliker: Awesome. Well, thank you so much. And I think you've given away a lot of tips for a third option and really appreciate your time, Richard.

Yeah. Thanks for having me on the show, Travis. It was an honor.