In this workable episode, Darryl Bates-Brownsword, Founder of Succession Plus UK, shares strategies to make your business sellable. If you struggle with exit planning or maximizing value, you won't want to miss it.

You will discover:

- How to start exit planning early to ensure a high-value sale

- Why reducing owner dependence boosts your business’s marketability

- What intangible assets like IP and branding increase valuationThis episode is ideal for for Founders, Owners, and CEOs in stages 5,6 of The Founder's Evolution. Not sure which stage you're in? Find out for free in less than 10 minutes at https://www.scalearchitects.com/founders/quiz

Darryl Bates-Brownsword helps business owners turn their life's work into a valuable legacy. As an expert in succession and exit planning, he works with SMEs to build resilient, sellable businesses that thrive without owner dependence. Through his 21-step methodology and Exit Insights podcast, Darryl empowers entrepreneurs to maximize business value, minimize risks, and exit on their terms. Darryl's insights are a must-hear if you're ready to secure your future and create a business buyers will love.

Want to learn more about Darryl Bates-Brownsword's work at Succession Plus UK? Cconnect with him on LinkedIn at https://www.linkedin.com/in/darrylbates-brownsword/ or check out his podcast at exitinsights.co.uk

Mentioned in this episode:

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Hello, hello and welcome. Welcome once

again to the start, scale and succeed. Podcast, the only

podcast that grows with you through all seven stages of

your journey. As a founder and I came across this crazy

statistic that I think all business owners should know,

and that is four out of five businesses fail to sell.

That's 80% that's insane. And so, especially for those of

you stage five CEO founders out there who have an eye on

becoming owners or selling your business outright, this

is a must watch episode, because here with us today is

a podcast friend of mine, the one and only, Daryl Bates

brownsword, who helps business owners to turn their life's

work into a valuable legacy. As an expert in succession and

Exit Planning, he works with small and medium enterprises

to build resilient, sellable businesses that thrive without

owner dependence through his 21 step methodology and exit

insights podcast, Darrell empowers entrepreneurs to make

to maximize business value, minimize risks and exit on

their terms. Darryl's insights are a must here if you're

ready to secure your future and create a business,

business that buyers will love. And he's here with us

today. So Darrell at succession, plus you guys

guide founders through, especially as stated on your

website. These five big we'll call them value stages, to

make their business sale ready. So for a founder, had

some success, they've got an executive team around them.

The business is really humming. For all intents and

purposes. They have no reason to think about selling right

now, but someday they will, and oftentimes it's too late.

So for those who are in that place, they don't necessarily

need to get out you, and I know that's the best time to

start working on your exit strategy. So for that person,

what are these five different stages, and why are they so

essential for a high value sale?

Darryl Bates-Brownsword: Thanks Scott for the fantastic

introduction, and I love the fact that we're getting

straight into the moody stuff, so it's 100% value straight

off the bat. So five stages, these are just the stages that

we need to think about. If we're going to be selling our

business, we want business owners to be moving beyond

that. Hey, I think my business is worth X. I've, I've seen my

mate sell his business, and I talked to him down the pub,

and he got this and I got that, and mine's better than

his. It's, there's a bit of a black art and a black box to

valuing a business. But let's put you on the front foot.

Let's make sure that you are in the best possible position

because of that stat that you shared before, like, four out

of five businesses don't get to sell, and it's the smaller

end of the market where that overweight that stat, but

still there's why do they not sell? Is we need to start

thinking about when someone's looking to buy your business,

how are they going to value it? What are they looking for?

And all they're looking for. Well, all they're looking for,

but the big picture of what they're doing is they're

going, what's the likelihood of this business continuing on

its current path or its current trajectory once the

ownership changes, and the more you can mitigate that

risk, the more value you're going to do. So let's quickly

look at the five stages. The first one is, let's start our

exit planning. So let's just identify what we've got

already. Let's do a snapshot. Let's do some due diligence

from your side of the table, while you're in control, while

you own the business. Then let's then sort of protect

what you've already built. You've been building your

business and doing a whole lot yourself and running the

business and growing and getting annual growth. But

let's just sort of protect and mitigate all the risks that

are just out there that you're flying by the city of pants,

and I'm not saying you're unstructured or anything, but

there's just a whole lot of risks that sit in your

business that you're just consuming every day. So let's

protect what you've got, and part of that protection will

make sure that your business is worth at least the standard

industry average. Once you've got that under your belt, you

can then start to go breathe a sigh of relief, because you've

actually built a nice foundation for your business.

You can then start thinking about, how do I maximize the

valuation of my business? I've got a nice foundation in

place. I've secured, if you like, the standard industry

multiple now, what are all those intangible things I can

start to work on that will increase the multiplier of my

profit number and increase the valuation that way. So all the

intangible assets. Now, once I've done I've been looking at

that, and I can take my business as far as I want to

go. So there's a simple formula and list, if you like,

of the things you can work on, all the intangible assets. Now

I've maximized my value, I'll get to the stage four, and

that's how do I extract it, because then I want to make

sure that I'm set up for a deal, that I don't have to get

my valuation through an earn out. How do I secure that exit

transaction piece and get all of those component parts line

up so. Want you to exit on my terms, and then once I've done

that, if all goes to plan, I've set myself up. I've set

my family up. I've set the business up so the business

will will continue to run and prosper without me or any

other owners involved. But now I've extracted all of my

family wealth, it's been sitting in that that risky

entity, the business facili, I've extracted it out, and

I've got a, hopefully now, a nice, really healthy bank

account. And I've got a different type of wealth to

manage. I've got a different risk profile for how do I

manage the value that I've just extracted out of my

business, and if I've done really well, how do I make

sure that it's generational wealth? How do I avoid the

different types of legal and tax traps that I haven't been

aware of over all these years. So it's I now need to manage

all of that wealth and create the family value I've created.

Love it. I love it. So let's walk through

these briefly, because I think there's some there's some big

opportunities to get these stages wrong. So it's one

thing to know what they are. It's another to do them right.

So identify value stage right out of the gate. What's the

biggest mistake that most folks make here.

Darryl Bates-Brownsword: Thinking their business is worth a

certain number because of industry averages, because of

their mate sold his or her business down the pub without

getting an independent valuation. My encouragement

is, if you start the Exit Planning, get a current state

assessment, understand what your business is worth today

and get that done by someone who doesn't have skin in the

game. And what I mean is, if you get an investment banker

in your business or a business broker to value the business,

they're inclined, they're motivated to give you a number

to win your business that's going to seduce you into

working with them. So we're just doing the planning stage.

Let's start with an independent valuation, and

then let's the big here's the big tip, Scott, let's develop

when we start Exit Planning, or succession planning doesn't

mean I'm going to exit in two or three years. It means I'm

just getting the business so it is exitable. Yes, do that.

I need to make the mindset shift from revenue growth year

on year to valuation growth. Let me start measuring the

valuation of my business every year, because that's where the

rubber hits the road, right? Profits, vanity valuation,

sanity. Let's, let's, let's get some serious methodologies

into our business and assess the valuation, not just.

So good, so good. All right. So moving

forward, stage two, we've, we've gotten an independent

valuation. Now it's time to protect that value. What are

some of the risks that you see disappear under the radar?

We'll put it that way, what are the ones, the biggest

risks that are right in front of them, but that a lot of

founders miss.

Darryl Bates-Brownsword: Biggest one is perhaps, owner

dependence, I guess, is, who does what? If someone's sick,

how do I, how do I transfer roles and responsibilities

slickly? And that's, you know, is the business systemized? So

I guess I'm separating operational risk, and, you

know, methodology risk, I guess, if you like, but

there's a whole lot of risks that we can address by by

working with an insurance broker, and we can protect our

income, we can protect all of our business assets. We can do

all the standard things with getting insurance policies,

but if we do a proper risk assessment, we want to start

looking at governance, we want to start looking at systems.

We want to look at owner dependence, and they're the

things that I really focus on, because we'll just outsource

and get a risk assessor into to do a full blown risk

assessment, right? But what are the things that we can do

we touched earlier. We want to demonstrate that the business

will continue on its growth trajectory once the ownership

changes. And the best way to do that is to demonstrate that

as the owner of the business, you're not required in the

business, but you're, you're you're operating in just three

roles. And here's, here's my, my biggest tip here, if you

like, you want to make sure that you're seen as the

person, as the vision, and you're sharing the vision, and

you're the big ideas person, going, we've got to go in this

direction. The management team figures out how to get us in

that direction and keep us in that direction, management

team, leadership team, whatever you want to call

because it's an SME business, an owner in business, owner

led business, where the owners are involved, not necessarily

in day jobs, but they're involved in the business.

They're the keepers of the culture. No matter what we say

about vision and values and what have you, people are just

going to look to us for guidance on how we show up and

behave in the business. If we behave in a certain way,

that's the standard they follow. So we set the vision,

we keep the culture. And the third thing is, we're not in

operational roles. We coach, we don't play so yeah, just

focus on those three things, then they. That's the biggest

risk mitigation gone. You're adding real value to the

business. You're coming up with the big ideas, you're

coming up the big strategies, you're setting the culture,

and you're not involved on a daily basis, because you've

got people, competent people, who know exactly the scope of

their roles and the extent of their responsibilities running

the business. And they're running the business to a

systemized approach, so that yes, so they've systemized the

running of the business, and they're using something like

Eos,

Fantastic, fantastic. So that gives us a

real, natural segue into maximizing the value. So we've

got the base level. Hey, we're not below market in these

areas. Now, how do we really start to step on the

accelerator. You talked about changing our focus from

revenue growth or profit growth to valuation growth,

yeah. What are the what are the main pitfalls here? How do

we tend to get this wrong, and what can we do better?

Darryl Bates-Brownsword: The things we get wrong again is

making assumptions and just looking at everyone else and

and what I see is business owners, they're going, Hey,

look, this person sold his business and they got five

times. Mine's better than his, you know, and mine's worth

seven go, why? Substantiate that claim? Or they'll go,

Hey, but that business got 12 times. And we'll go, why? And

they'll go, well, they just got lucky. I go, bullshit,

nonsense, right? So there's a reason that they got 12 times,

and it's because they had built the intangible assets.

And what are the things we mean by intangible assets?

Well, they demonstrated that the culture was clean and

people stayed around and they knew exactly what they were

doing, and they didn't have staff turnover, and people

knew exactly what they're doing. They knew they had job

descriptions. We had an organizational structure. We

had systems in place to make sure that business is

consistent, repeatable, reliable. Everyone knew what

they're doing, and it means that they're not working

stupid hours to get things done and peaks and drops.

Great culture. We've then got, we talked about systems. We've

got a systemized approach. We've then got some sort of

proprietary methodology around our product, and we can be a

service based business, but whatever it is that you're

selling your service is a proposition, and it's got to

solve a problem that the client has. Now they can come

to you and say, hey, I want a haircut from you. If we're a

beauty salon or what have you, or they can go, I want the

Scott special. Thanks. Because everyone knows that the Scott

special, and I've probably used a bad name there, but

you're no it's definitely IT company name. So what we want,

we want, we want to demonstrate that to really

build value that the people are coming to buy the

proposition rather than the purpose the person. And that's

why I said Scott was probably a bad, a bad, okay, we want

people to buy whatever your business sells, which is

packaged up and you've got some IP around it, and they're

either buying your methodology or your name or your solution

name, or what have you. We want people coming to your

business for the process or methodology, rather than

Scott, who's doing it, or Darryl, who's doing it, who we

love Scott, because Scott always looks after us. He does

a great job. And I'll just follow Scott, whichever

business he goes to next, right? That deflates value

from your business. So we've got some methodology, and the

next thing we've got is we've got some branding. Have we

branded the business is my methodology now linked to my

brand, and the two are one and the same. And whenever I talk

about brand X, I'm associating it with that methodology or

that IP or product or what have you. And then then bang,

that branding becomes known in the marketplace. A lot of

business owners, especially when they're small, they'll

get a logo and a brand and and some letterhead done, and they

think they've done brand branding so much more than

that. When you talk to the gurus, and it's being the

brand is a promise. It becomes it's like, if we we talk about

Trump as a brand, everyone knows what you're going to get

with it, with a guy you know, doesn't matter which side of

the fence you sit on, you know what you're going to get with

Trump. You may like it. You may not. It doesn't matter.

He's branded, and it's great well, and everyone knows what

to expect from him. That's what I mean by branding. So

your business needs to have an implied promise just that's

associated with your name. That's when you've nailed it,

and then your business is worth a whole lot more. Next

thing is on the little methodology that I use is, are

you scalable? If I've built this little prototype, if you

like, where I've got my product, my methodology, my

culture and my staff and my structures and my systems in

place, and I've got my roots to market tap, because I know

exactly who I'm solving problems for, and I know how

to approach my target market, then I've got a template, if

you like. I love Gerber's language in the E Myth. I

think he called it a franchise prototype, but you can then

plug and play and replicate that business model in more

locations. You're scalable, right? So that that's the next

layer. If I can just demonstrate that, here's my.

Prototype. I just need a bucket of money, pe type

money, to come in, and then I can, then the business will

scale up. But I've done all the hard work. I've proved the

concept for you. Bang, there's the next piece. You put all

those things in place, you're going to get a top, top model

for valuation for your business.

Absolutely, absolutely. So that takes us

to the next stage here and unlocking that value. So this

can be really intimidating for a lot of folks, because it has

a huge impact on your life in many ways. It's the it's the

final assessment of how you've done over this years, in all

these years, in a few ways, and there's a lot of emotion

riding in all of this. So as we're walking into this unlock

value stage, how can we manage some of the emotion, and what

should we expect?

Darryl Bates-Brownsword: You've I think you've nailed it

there, Scott, there's a lot of emotion involved. And yeah,

I've built this business over so many years, it's hard not

to be attached to it, and it's hard to separate. It's been

like when your kids go and get married, I guess, and or they

go and they leave home, which they're going to do as much as

you love having them at home. You love when they leave home

to give you a break, but at the same time, you don't want

them to go because they're now adults, and they're good

company, and they're with you, so your business is going to

leave home at some point. So the best thing we can do is

get a third party involved who's not emotionally attached

to our business, yeah, to drive the process and to drive

the negotiations. So whether that's an investment banker

and a CFO and a lawyer, they're the three that I would

always have as part of the team, and I'd, in fact, get

the CFO involved two or three years before to start getting

the financials and the business due diligence ready.

And even if you've already got a part time CFO in your

business, or even a full time CFO, I would consider getting

a deal specialist CFO in to support your your regular

CFOs, because they've still got their day job that they

need. But you get a deal specialist CFO in to get the

business specifically ready for exit, because you don't

want anything to slow down the negotiations. Once you start

talking deals, anything that will slow it down will

decrease the value of your business. So you've got your

CFO involved. You get your investment banker. They know

the s and you want one that got specific knowledge of your

industry. Get them involved. They can do all the negotiate

negotiations on your behalf. And they're not emotionally

attached. They know the market. They know what's

possible. They've got the experience do all the

negotiations on your on your behalf. And the third one, an

attorney or a lawyer or a solicitor, depending on where

you're based, make sure you again, get someone who's got

experience in deals to make sure that you're not taking

any unnecessary risks and you're not going to be caught

out by the terms of the deal that end up being more

favorable to the buyer, right? So they're three key players

you want, and that's where a lot of people take shortcuts,

because they're expensive, but it's like L'Oreal. It's worth

it. There's an example of branding.

Love it. I love it. Now. What happens

here? And you mentioned this in the very start of the

episode, you got a big wad of cash inside a bank account

somewhere for most business owners, way more than they've

ever had before. Yeah, and with that bank balance comes a

huge responsibility to steward it well. And so as we're

looking at that balance, thinking about turning it into

generational wealth, what are some of the biggest mistakes

you see post exit, post sale that founders and owners make.

Darryl Bates-Brownsword: Biggest one I see is when a business

owner has been building their business and building their

wealth steadily over 1520, years, and they may have an

IFA for a wealth manager or financial planner that they're

working with, and they've been working with all those years,

and because they've got a good relationship with them, they

want to be loyal to that person. Understand that we all

do. But just like when you're running your business, your

suppliers and your clients, and especially if you're B to

B, your client, businesses tend to be a similar size and

scale to you often work for your most successful

relationships. So if you're a 10 million pound business,

you're probably working with an accountant who is a 10

million pound or a $10 million business, because they're a

similar scale to you and scope of operations, and they know

how to look after businesses of your size, sure. So you can

see where I'm going with this, if you, if you don't, you now

got a whole lot of money, because you've been really

prosperous in building the valuation of your business,

and you got a big chunk of change, and we're now talking

that, yeah, you may have, you may end up with 1020, 30,

hundreds of millions of of the proceeds that end up in your

bank account. You need to make sure that you're working with

a professional who's used to dealing with funds and

investments of that size. Yes, after all those years of hard

work, you don't want to blow it by making the wrong

investments, by missing out on by paying too much tax, by not

protecting your generational wealth, not looking after your

family members and doing the right things and getting your

wills, and you all of the other bits and pieces and

trusts, and you've just got to get someone who's an expert,

and I'm not an expert in this area, but you want to work

with someone who's got a private office, who's used to

dealing. They're not buying retail investments and just

getting things off the shelf. These guys access to wholesale

they are. They're just working with private client, and that

amount of wealth to get the right advisors again is the

key here.

Yeah, yeah. Marshall Goldsmith nailed it

with what got you here won't get you there. But what keeps

striking me as we're going through this episode is, who

got you here won't get you there, right? Most founders at

this stage have a brilliant team around them. They're

executing. I mean, it's like, it's like clockwork. And a lot

of what goes wrong here is the team that runs your business

is not the team you need to transition your business and

and that can be intimidating, but if you think about it, you

didn't know how to how to figure out who you needed back

in the early days, right? You figured that, over time, with

the right guidance and the right focus, you can build

that skill for this stage of the your journey as well. And

and every one of those questions came back to a who,

right? It came back to who we need in this process, and so,

so helpful. If you didn't catch that you're listening or

watching, go back and watch it again, because you'll see that

the thread run all the way through and just make a list

of all the people you need to connect with. And that's your

homework. But Darrell, before I let you go, because we've

got through these five different stages, but there's

a question that I ask all my guests that I'd love to ask

you, and then we'll make sure folks know how they can get in

touch with you, because I know they have questions, but my

question is this, what is the biggest secret that you wish

wasn't a secret at all? What's that one thing you wish every

founder owner listening today knew.

Darryl Bates-Brownsword: The big one Scott is, and when

you, when you I didn't know this question was coming, and

I was sitting here going, Oh, what's going to hit me with?

Well, I know the answer, but I know the answer to this

straight away. The biggest secret is, is kind of where we

started. This is we said, hey, look, only four out of five,

sorry, four out of five businesses that go to market

don't sell, they don't end up with a successful deal. And

that kind of is the biggest secret. Because business

owners, the successful entrepreneur. Business owners

that we're talking about are very entrepreneurial.

Entrepreneurial people are really optimistic people. And

all of them think, well, I'm going to be that 20% right? So

the biggest secret is they just assume that our business

is okay, we'll be able to sell it no problems and and they

don't do that any preparation. Because, like you're saying,

if we start preparing three, four or five, even 10 years

before we plan to exit, we make sure we get to know the

right attorney, the right lawyer to work with. We know

when to upgrade our tax person. We know which m and a

consultant, broker, investment banker we're going to be

working with to that we get on. Weldon is an expert in our

industry, and and over the years, we'll build a

relationship with them, and when we're ready, we can just

pull the trigger, and we can have 100% confidence. And it's

not that we've done it before, but we've done all the

preparation that puts us on the front foot, and we will

definitely be one of the 20%.

Absolutely, absolutely. Darryl, before I

let you go, I gotta know. How can we get in touch with you?

How can folks listening or watching today reach out and

connect with you? Get succession plus,

Darryl Bates-Brownsword: okay, the best way to get in touch

with me is through LinkedIn. You can see my name on the

screen. There's only one of me on the planet. It's good and

bad sometimes, but LinkedIn is the fastest and easiest way to

get in touch with me, and you'll get in touch from

there, you'll get through the website and everything from

there.

Fantastic. We'll get that LinkedIn

profile in the show notes as well, so you don't have to go

searching for it, although I wish I was able to say that

you think like a name like Scott Ritzheimer, there

shouldn't be more than one of us, but I'm a junior, so I

know the feeling that. But anyway, Darryl, fantastic. I

love the simplicity of it and yet the power behind it, and I

hope it sparked something for some folks listening today,

don't be one of the four in five. Be one of the one in

five, and follow these steps. Maximize the value of your

business, and you will be so glad you did reach out to

Darrell and the team. LinkedIn notes below, Daryl, thanks for

being here. It was a privilege and honor having you on the

show. I really appreciate it. And for those of you watching

and listening today, you know that your time and attention

mean the world to us, I hope you got as much out of. This

conversation, as I know I did, and I cannot wait to see you

next time take care.