In this strategic episode, Justin Goodbread, CEO of Relentless Value Coaching, shares systems for building transferable businesses. If you struggle with low valuation or exit planning, you won't want to miss it.

You will discover:

- Why systems reduce owner dependency for stage 5 exits

- How to optimize eight key areas for higher valuation

- What mindset shifts drive decamillionaire success

This episode is ideal for for Founders, Owners, and CEOs in stage 5 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

Justin Goodbread has spent the last 30 years building, growing, and selling businesses. His dedication landed him at decamillionaire status before the age of 40. He spends his time now helping business owners discover the proven system to make more money, grow their impact, and get their life back. Respected keynote speaker, bestselling author, and coach of high-performing financial advisors, Justin inspires advisors to rapidly scale their companies to 7, 8, or 9-figure transferable values. Apart from being a successful business coach, Justin is also a YouTube personality, top podcast host, serial entrepreneur, and dynamic business educator.

Want to learn more about Justin Goodbread's work at Relentless Value Coaching? Check out his website at https://www.justingoodbread.com/. Listen to his podcast DecMillionaire Decoded at https://podcasts.apple.com/us/podcast/decamillionaire-decoded/id1332958360 and grab a copy of his book on Amazon at https://www.amazon.com/Your-Babys-Ugly-Maximize-Business/dp/1732059934/ref=sr_1_1

Mentioned in this episode:

Take the Founder's Evolution Quiz Today

If you’re a Founder, business owner, or CEO who feels overworked by the business you lead and underwhelmed by the results, you’re doing it wrong. Succeeding as a founder all comes down to doing the right one or two things right now. Take the quiz today at foundersquiz.com, and in just ten questions, you can figure out what stage you are in, so you can focus on what is going to work and say goodbye to everything else.

Founder's Quiz

Scott, 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'm your host, Scott Ritzheimer, and

we've got a great episode today for those of you who've had some

success in this entrepreneurial journey, you've reached stage

four, stage five of the journey, you've got a business that's

working, and you've got an eye toward the future, asking

yourself, what's next? And so here with us today is Justin

Goodbread, and we'll get to his bio in just a second, but he's

gonna help us think about our exit, not just in terms of the

dollars and cents, which is helpful, but the team that's

gonna help us get there and what leadership looks like through

this changing process. So who's Justin? He's spent the last 30

years of his life building, growing and selling businesses.

His dedication landed him at a decimal millionaire status

before the age of 40, he spends his time now helping business

owners to discover the proven system, to make more money, grow

their market and get their life back. He's a respected keynote

speaker, Best Selling Author and coach of high performing

financial advisors. Justin inspires advisors to rapidly

scale their companies to seven, eight or nine figures with

transferable values. Apart from being a successful business

coach, Justin is also a YouTube personality, a top podcast host,

serial entrepreneur and dynamic business educators here with us

today. Justin, I love the book. Got me with the name your baby's

ugly as fantastic introductions. Very true. It doesn't have to

stay that way, hopefully. But in the as I was reading, there was

this illustration that I've probably seen it a million times

in a million ways, but it just stood out to me. It was this

tale of two companies. And so for those of you who haven't had

a chance to read the book, we're going to show you how you can

read the book. But basically it's this idea that there's two

companies, same revenue, same profit. Let's assume the same

industry, but then the similarities stop there. So one

of the companies has, it's got the systems and the processes,

the software, the financial reporting, but the other

doesn't, and so out of the gate, Justin, to start us off, how big

a difference does that make in an exit, you know, is it? Is it

like 80% is set by the profit and revenue and revenue, and 20%

by everything else? Or is there this a bigger part of the

equation than we're giving it credit?

It could literally be seven, eight or

nine figures in valuation between the difference of those

two data points. So, as you illustrated and Company A, they

have done vast improvements to modernize the company, to

decentralize the owner, to create harmony and balance

across the 256 metrics that a company can operate on. Whereas

Company B did not, they are still founder LED. They are

still founder choking. They are still working with old, archaic

systems, probably more than likely trying to maximize

profits for the shareholders or for the founder. And while in a

lifestyle business, the vast majority of business owners love

that idea of, Hey, how can I bring home more income? How can

I create more liberty for myself if I'm able to make $2 million

this year, $500,000 this year? Man, I'm living high on the hog,

so to speak, as we would say here in the south. But whenever

you look from a buyer's perspective, they want to buy

ROI, they want to buy a return on their purchase. And so they

do not. They aren't necessarily looking for high income in so

much so as quote the golden goose, the old proverbial golden

goose. So yeah, I mean, it could be, it could be significant

valuation differences between a company that has prepared for

the exit and one that is reactive in nature to your exact

percentage point. There are studies done by the Academy and

mergers and acquisitions advisors that so as much as 80%

of the value could be attributed to the intangible assets of a

company. The intangible assets of a company our systems,

processes, people, things of that nature that we cover ad

nauseam in the book.

Yeah, yeah. So you lay this out, and it was

just a real simple, helpful way, and it kind of sets the

foundation for a couple more questions that we're gonna ask

here, but just walk us through. What are these? What are these

ace eight aspects of taking care of our baby that we need to be

paying attention to. And then we'll one pack, a couple of

these that I think are particularly important for our

audience.

Yeah, Scott, I grew up in the South man. I'm a

country boy at heart. That's who I am. And I can remember, you

know, in this in the South Georgia heat, we would go to the

playground, and there'd be this thing called a merry go round. I

don't see many of them anymore. You know, I'm showing my age

here, but a merry go round was a big, round piece of metal that

had these welded bars onto it, and you if you could get it

spinning fast enough, it got fun. We were holding on for dear

life, and he fell off. You laughed and giggled whenever I

was growing up. Man, we had this guy named bubba. He was a

typical bubba. You can almost see him in his mind's eye. He

was a man's man. Big old guy. I mean, he was bigger than

everybody else inside the group, and he he loved to use his size

to his advantage. And so oftentimes we would get Bubba on

one side of the merry go round, and us kids would be on the

opposite side of the merry go round. And then when Bubba fell

off, man, merry go round got out of whack. As business owners, I

want you to use my little, simple example of Bubba in your

mind. Now, in a business, there are eight areas that have to be

in harmony for us to maximize the enterprise value, or the

transferable value of business. There's eight key areas. And

every business has these eight areas. So the eight areas begin

with leaders and with planning, where specifically you're going

to go every every company out there, every business owner, is

doing some sort of planning. We might call it strategic

planning, annual planning, something of that nature. Then

you have leadership. How are you how are you imposing that vision

to others, whether they can take the charge of the mantle and

execute on the vision? That's leadership. We have sales and

marketing. That's number two, and that's number three and

four, two different things, two different purposes. Oftentimes,

small business owners will combine those two together, but

they have two different purposes. So you have sales and

marketing, you have people and operations. So that would be

your internal people, your customers, your vendors, all the

people who work within the business or touch to the

business and operations is how we delivery upon the product,

the service that the customers bought. And then the final, last

two is finance and legal. Finance is basically a P, A, R,

accounts payable, accounts receivable. You know, looking at

almost like through the mind of a CFO, a chief operating officer

and a CFO together. And then legal is all the risk things

right? That would be insurance or legal documents. When you go

to exit the company, definitive documents, things of that

nature. What happens in business is we all start out we're

founders, as you said, phase one, we're founders. And, you

know, we roll our sleeves up and we're tenacious, and we charge

hell with a water pistol. We're out there making it happen as we

move through your seven phases, at some point, we're going to

reach the point to where everything is stagnant because

of us, our abilities have caused us to hit a glass ceiling. Our

leadership has caused us to hit a glass ceiling. Our market,

whatever it may be, somewhere within those eight areas, we as

founders find ourselves in the center of the merry go round.

That's the safest place to be, dude, whenever a bubble was on

one side and somebody else on the other, if I could get to the

middle of the merry go round, I'm not falling off. I'm sitting

there watching everybody hanging off the side, waiting for them

to fall off, right? So we as business owners get to the

center because it feels safe. Reality is, is that's not safe.

It's costly. What we want to do is totally exit the merry go

round and have our friends, our big clients being offset by

small clients, our dynamic key players being offset by maybe

not the dynamic key players. You're trying to build a

business that is in harmony. And if you can do that without you,

the owner, riding the merry go round. Am I a simple metaphor?

If you can do that, then, dude, you built a business that an

investor will literally line up and pay you bank for. Or you may

say, You know what good brand, I don't want to sell the company.

I've been there. I'm right there. I'm on one of my own

companies right now. That's cool. Now, instead of an

investor paying you bank, now you sit back and you've got the

golden goose created that can operate without you, and you can

collect your dividend, or you collect your income, and just

sit back and enjoy the business from a different angle.

Yeah. Speaking of different angles, you took a

different angle in the book that I really, really appreciated,

for folks who are familiar with the work that we do, we do a lot

around leadership styles and how those relate to the actual

tactics and strategy and planning of the business, and

you do something very similar using the disc model. So why do

these different personalities matter for these eight areas?

Yeah, so the disc is one that, I say, is an

owner's simple barometer. It's, you know, we could go to the

Myers, Briggs, we know 16 personalities we can do. There's

a plethora of different types of personalities exams out there.

To me, the disc is the simplest one that a founder, that an

owner can look at. Don't have to know all the details, but can

recognize what's happening in the company. So if you take

those eight areas and we go back to my merry go round, there was

one merry go round that when I would go to the park, one

quarter of the merry go round was painted blue, one quarter

was painted red, one quarters painted green, and one quarter

quarters painted yellow. So we had this. You can look at the

merry go round, and you could tell that it looked like a piece

of pizza that had four different types of pizzas together, right?

The same is true with with business. So you have planning

and leadership. Is a quadrant that, let's call that blue,

sales and marketing are in alignment. People and operations

are in alignment, and finance and legal are in alignment. But

if we look at a company, the personalities needed to be the

leader and the planner is different than the company than

the personalities needed to handle people, HR and deal with

operations. The personality is different between the sales and

marketing team than that of legal and finance. And so if you

take the disc theorem, disc stands for dominant,

influential, steady and conscientious. So four different

personalities without diving into the details of disc. Here's

a simple way to apply it. D is dominant. Oftentimes your CEO or

your leader is going to be a higher D than any other

personality type. And so if you understand that you have

somebody in a leadership position and now they're an high

s personality, we're gonna have some misalignment. There's gonna

be some problems. Or if they're leaders, maybe they need to be

leading the operations department, because that's where

the S would sit. So D is dominant, I is influential.

Those are the fun loving people, right? They're the life of the

party. You walk in the room, their personality is bigger than

the room, and you just love to be around. They make you feel

good. They're just fun, right? That's not me, by the way. I'm

like a high off the charge. D, so these people are just fun to

be around. That's typically your creatives. That's your marketing

your s are your checklist people, right? They would like

to look through checklists. That's operations minded people.

Step one, step two, step three. Step one, a little b, step 1b, I

mean, they have this mindset that goes through this

checklist, and then your Cs are often the very analytics there's

typically your CEO, I'm sorry, CFOs, your chief compliance

officers, your attorneys, the ones who want to fuss over a

penny, where did that Penny come from? For me, as a D person, I

was like, I don't get a fly on flip. It's one penny. But for

them, it matters greatly, right? I also say attorneys love to

fuss over commas and exclamation points. It matters to them. So

why? Why these personalities matter from a business owners

perspective, is, again, we want to build a business where it can

operate without us. So if I'm looking at the business and I

have a strong, dominant leader on my team who is a D, A D, i

that means they're dominant and they're fun loving, there's

going to be conflict between that leader and the SC

personality, because the dominant person, they're not in

the weeds. The s personality is down there building a checklist,

and the C personality is going super deep into the weeds. When

the business, what we often will see is most handedly, is your

marketing and sales people, because their eye personalities

are not in the weeds. They're not super detailed. They're fun.

They can just say things and they want everybody else to

deliver on them. Oftentimes, they'll have a great amount of

conflict between your the C personalities, those extreme

detail persons. If you're building a team that's

transferable, that's the key, Scott, you want a team that a

buyer will adopt, and they'll they'll bring into the comp

their their presence, and the company will operate without you

in the center of that merry go round. If you're building a team

that is transferable, then those personalities have to be

weighted, using my little silly example of Bubba, they have to

be weighted to where you don't have one personality so much

heavier than everybody else on the merry go round that the

merry go round can't operate. So from an owner's perspective,

just simply looking and saying, hey, you know, we're having some

struggling in our operations department, where they're

closing some deals, the sales team's closing deals. But now

here we are in operations, and we're just not delivering. We're

running lethargically. We're not living on time. We're having a

lot of QC issues. There is a disconnect between the sales

department and the operations department. I would almost

guarantee you that it's a personality misalignment in the

organization.

Yeah, it's so true, and there's so many things

that this start, starts to set into order for us, but one of

them is just the recognition that you know, your idea of it

being transferable is up to this point, the team you've built

around you has always been around you. It's been the team

that you need to do your job right and to do their jobs. And

this is really the first time that we started thinking about

building a team that's going to be here after us, and you need a

balance of all of these, and sometimes that means filling the

void that you're going to leave behind, which is something a lot

of folks don't quite recognize. And what they end up doing is

pulling their their sales ops person, right? Or, I'm sorry,

sales marketing person, who's an i, and putting them in a DC, and

the whole thing really starts to struggle. So I love that

overlay. It's again, it's in there in the book, and just adds

so much clarity and color to what would otherwise be a really

rote process of trying to get all the pieces in place. It's

really a human thing.

Whenever you're a founder, or whenever

you're scaling a business to replace you from being in the

center of the merry go round, what I would often recommend

this is how we coach our clients, is find the person

opposite of you first. Most founders are going to be

dominant type of personalities. Why? Because you had to have the

grit and tenacity in order to charge hell with a water pistol,

against all odds, against every business plan out there and say,

No, I believe we can do this. So more than likely you're a high

D, you may be a DI, a DC, one of those personalities, like I'm a

high D with a C, which is why I love building businesses,

setting up teams, and getting myself out of the way and let

them work. So that's my personality. So if I'm going to

hire somebody, I'm going to hire an S personality, somebody. I

can take those things off my plate that I don't care to know.

I don't want to know the step by step process on how we're going

to deliver this is what I want to accomplish as the founder of

the company. I want to go in this direction figure it out. So

I have to have a dynamic for me, as dynamic as I am on my high D,

I have to have an off the charts s, personality. So my chief

operating officer has got to be a stud. They have to be so if I

go my stud opposite first. Now I've got some balance. Well, my

other two quadrants on my merry go round. They may not have to

have the same dynamic personality, but they have to be

balanced. Where the handoff becomes is whenever I want to

replace myself with a president or a new CEO or a new visionary,

that is tough, and here's why. Title of the book is, your

baby's ugly. It's not by accident. My dad used to say

growing up, he would say, Son, you never tell a woman their

baby's ugly, but if you do, you better run her duck, because

they're coming after you. Throw something after you. They gotta

chase you down, but you don't, because it's my baby, the same

pride that we have, like we would look at our kids, and that

pride swells up within us. It converts to a hubris, pride real

quick with us, founders that no one can do this as good as me,

and that's just not true. And so as we build the systems out,

there comes a point and where we coach our clients to do is say,

Go away for six months. And whenever I say that, if you're

listening to me and your heart just fell, it means you're not

ready for this. Okay, so you can build yourself to the point, but

go away for six months. Let's expose the problems in a six

month time period, if you've done great leadership and great

systems, and the company is not going to flounder because of

lack of leadership if you built the structure properly, but

after six months, you're going to need a dynamic president, are

gonna need a somebody within the key position where I like to

lean into is finding somebody like me. Now, here's the

conflict. Opposites attract, similarities often repel. So the

problem is that I often see within myself and with other

founders, is when we go to replace ourselves, we start

micromanaging our replacements. Austin Powers used to have the

stupid video. They have mini me on there, right? We're literally

finding the Mini Me, not in a comical sense, but you're

finding somebody who can replace you. And when you do that, we

end up seeing all the things we don't like about ourselves in

that person, and we micromanage and that, I gotta tell you,

Scott, I've seen that cost in founders eight figures before,

just not able to least control.

Absolutely, absolutely. Justin, I think we

could talk for about seven more hours, but I wanna be conscious

of both your time and our audience's time here. So before

I let you go, I've got one more question for you, and that is

this, what would you say is the biggest secret that you wish

wasn't a secret at all for those founders that are listening,

that are in this place right now, what's that one thing you

wish that they knew?

So we have a podcast called the DECA

millionaire way. A new book is coming out. It's gonna be

talking about the DECA millionaire way. And the biggest

secret that should not be a secret is the sheer amount of

money that you're going to need to have freedom. So I want you

to think about it this way right now, you may be made paying

yourself, let's say, a quarter million dollars. That seems to

be a number that seems to be a number that founders want to get

to pay yourself. 20,000 a month, take home, pay more than likely,

in your company. You're also perhaps paying your significant

other. You're perhaps buying a car, cell phone, computers,

trips, whatever else going through the company that your

tax advisor has allowed you, when you start adding up all the

benefits of your company in terms of compensation for

yourself. It is not uncommon to see founders who are been to

Finney economically at $400,000 a year, or $500,000 a year, or

$600,000 a year. So I want you to think about this when you

when you're building a company, and more than likely 80% of your

net worth is wrapped up in this company, and the only way that

you're going to gain true freedom is to turn this highly

illiquid asset into a liquid asset. Because even if you build

it to where you have the golden goose and you're out on the

beach one day, your still minds gonna be back there wondering,

What if so, the only way you're gonna have true mental freedom

is to turn it from an illiquid asset to a liquid asset, which

means that the amount of money you're gonna need to say in your

life is far greater than you ever imagined. So let's per

venture, say that you sold your company for $10 million by the

time you pay Uncle Sam, by the time you pay the broker, by the

time you pay the attorneys, the CPAs, the advisors, the broker,

whoever else involved, it's not uncommon to lose 1015, 20, 30%

of the value. So let's say it's 10 million. And let's just do

some simple math, and let's say that you lose 40% because you

live in a high tax state and you didn't do the planning right.

You have $6 million 6 million times 5% is only 300 grand. The

reality, the secret to what I'm the answer to your question,

Scott, is this, you need to aim for a valuation of 10 million

plus in today's value if you're even the least bit successful.

And what got you to the point where you're at today is not the

same pathway that you're gonna have to take to shift it from

your current valuation to a DECA millionaire valuation. It's a

whole different amount of thinking. And that single thing

that I wanna shout from the mountaintop and wave the Yellow

Flag, the caution flag out there, is to say, friends, you.

Don't wait. Start building today. Start building your

journey today. Figure out what that exit needs to be. Let's

backwards in calculating that data points and build that

journey and then charge hell with a water pistol. Believe you

can do it and make it happen.

Yeah. So good, so good. Justin. Just fantastic,

fantastic information, both in the book and here on the

podcast, clearly an expert in what you do. I really appreciate

your time and attention coming here and spending with us today,

and for those of you who are watching and listening, you know

that your time means the world to us. I hope you got as much

out of this episode as I know I did, and I cannot wait to see

you all next time, take care.