What if your business could run—and sell—without you? Most entrepreneurs say they want freedom, but their business depends entirely on them. The real secret? Building with enterprise value in mind from day one. In this episode, I break down the four pillars that make a company truly sellable—and share the hard lessons most owners learn too late. Are you building something that works because of you… Or without you?

And it's like if your business is growing, but the value of that business is not, then you just wasted a bunch of time capital. So having that guiding star, that guiding light of say of, Hey, I want to go from 1 million to 5 million of enterprise value, and I wanna sell it in X amount of years, well then all of a sudden we can reverse engineer.

Okay, so the number four area, and we call these the two Ps and the two Cs, so people, processes. And then the next high, high value when you sell your business is your clients. And it's exactly what you think it is. If you have client concentration, you're less valuable. If you have a diversified, broad base of clients, you're more valuable.

Welcome to the Exceptional Companies Podcast, a podcast for purpose-led entrepreneurs looking to master the art of buying, selling, or optimizing small businesses. Your host, Chris Seegers, founder of Exceptional Companies and author of Selling Mainstreet, has over a decade of experience starting, buying, and leading successful businesses.

He's here to guide you through the complex world of business transactions and growth. Each week, we dive deep with actionable insights, expert interviews, and real-world strategies to activate and equip you to live exceptionally and build exceptional businesses. Now, let's dive into today's episode.

Here's your host, Chris Segers.

Tato Corcoran: Hi. Thank you for having me back.

Chris Seegers: Yeah, it's exciting. So we've been getting a lot of questions and you have as well, from either potential buyers or potential sellers, on just, Hey, how should we think about building our business?

And we have a very different approach than most business owners and folks that are on the a d advisory. We believe you should always build your business to sell. And I'm not saying, Hey, you should sell it tomorrow. I'm not saying you should sell it in 10 years, but you should be building a business that is always sellable.

And then people say, well, how do I actually track that? And I said, well, let's make this very simple. The way that we do this is we value your business, or you get somebody to professionally value your business. Let's say it's worth a million dollars and you say, Hey, I actually to retire, well need my business to be worth 5 million bucks.

Is there really four buckets, and I want you to interrupt me as we go, but so the number one factor if a buyer's coming in and valuing your business, they're gonna look at the financials, and then the first thing they're gonna go into is your people. And there's some really big buckets that you can kind of niche this down into the people, is you as well.

Are you working 50 to 60 hours in your business? If so, your business is less valuable. If you've got the right people and processes and you're working 10 hours a week and your business is growing, it can't just be you're working 10 hours a week and it's flat or it's going down, right? Like it's gotta be growing.

I.

Tato Corcoran: Yeah, definitely. My situation was a little unique because when I took the business over, um. Really, I had pretty much no employees. I had two people. So, and I only ended up keeping one. The other one now is kinda my right hand. My number two, if you will. And we had to fill in all the positions from there.

But as I did that, the first couple hires were survival mode, right? We just

Chris Seegers: Yep. And I would say, too, you and I have talked about this, be very okay as a business owner with the seasons of Survive to Thrive.

Tato Corcoran: Yes.

Chris Seegers: The survive might be the first two years of your business, where you're just like, Hey, we've gotta get this thing profitable. We have to get the right people in the seats. And then you're gonna start getting capacity back. And that's when you're heading towards this Thrive model. And the Thrive model is what we're saying, is where you can really build enterprise value, and you're building this thing to sell and to always be sellable, but in survive, you're not thinking this way.

And I can't remember who had this quote, but there's a quote basically that says these pros, it might be in traction. The EOS system that we use, you know, the processes should be written, understood, and abided by all. Not just like, Hey, our sales process is this and our estimating process, but it's like, hey, this is literally digitized and it's followed by the estimator.

The estimator knows exactly when. When something, when a lead comes in, this is exactly how it flows through. This is the amount of time you're tracking it, et cetera. So people and processes are two big buckets of value that when we have a sell-side client and they say, I want to go from one to 5 million.

Here's our guidebook, and everybody's following 'em. It's like, well, yeah, you know, we got this spreadsheet and it's, that's where our sales thing is, and it's I, I'm not really sure where that's held. And so the process piece, and we like using EOS, not because it's better than any other system, but it's widely known.

Tato Corcoran: Yeah.

Chris Seegers: if we have a seller and we can get them to use EOS for a couple of years, and then when we sell that business for 'em, I can go to a buyer and say, Hey, they've been running EOS. And so all of their cadence of meetings, here's the three-year plan. Their one-year plan, here's their processes, here's their scorecards, here's their org chart.

Or accountability chart that values people will pay you a lot more for that business when I can just basically give them the operating manual and say, Hey, they're doing this amount of revenue and profit, and here's the three-year look. All you need to do is do this. Do the things that are in the thing.

Tato Corcoran: In my opinion, of all the subjects we're gonna touch today, I think that is the toughest, creating anything from scratch. Is really tough. Right. And for me, I also, you have to create a process once you have a process, or you have to detail out a process. Once you have a process, but you have to create the process, and then the process has to be a good one, right?

Well, that comes trial and error. So there's so much chicken or egg, you have to start somewhere. And so you cannot wait for you to have perfect processes before doing this. You can't, like, you have to start somewhere. And sometimes I think in detailing out.

Chris Seegers: Yeah. And I think like that's one of our core values is a growth mindset. And the reason is because we're always iterating on this stuff. Like we, we get our process dial in and we're like, okay, this is really good. And then we get some new data, and we're like, actually, this could be way better. Like, we're retooling our entire CRM process for all of our businesses, and it's gonna be.

It will be a hundred times better than what we have right now. And our system is pretty good right now. And so you've gotta have team members that aren't. Like that are okay with that because it, I mean, it's exhausting. You're like, Hey guys, we were really good and we did this whole thing last year, but now to be the greatest, we're gonna do it this way.

People that are growth-minded are like, awesome. Thanks for coaching. Thanks for the like, I wanna get better. I wanna be the best at what I be. I. But some people are like, Hey man, there's too much change. I just can't stay on this treadmill. And so the process detailing is so critical to building enterprise value for your company.

The number one goal is growing enterprise value, and even growing culture and taking care of our human beings is gonna contribute to that enterprise value. When that's the goal, everything else flows backwards from that, and you can build your three-year, your one-year, your 90-day, your scorecards. But if not, a lot of times we start chasing growth or this or whatever it might be.

And it's like if your business is growing, but the value of that business is not, then you just wasted a bunch of time capital. So having that guiding star, that guiding light of say of, Hey, I want to go from 1 million to 5 million of enterprise value, and I wanna sell it in X amount of years, well then all of a sudden we can reverse engineer.

If you have clients that are coming through your CRM to you as opposed to you're going to have to go grind every single thing, more valuable. If every one of those client sales is higher, right? Like, hey, you're selling a $10,000 item as opposed to a $250 item, you know, more valuable. And so a lot of times we do a lot of work in the trades.

So HVAC, plumbing, drywall, you know, insulation, anything touching real estate. A lot of these folks come to us and they're like, yeah we, our business is worth so much. We've got these five amazing GCs that we work with, and I've worked with them for 20 years. And I'm like, that's awesome, you, they're your buddies.

A 40-year-old person that may have been in the space but doesn't have that relationship, and you have five companies creating all the value for your business, you've got a concentration issue.

Tato Corcoran: Mm-hmm. Only for the buyers, so they're gonna say, Hey, if it's worth a three x, now I actually only want to pay 'em a 2.2 x because of that concentration.

Chris Seegers: The second thing that, or the second group that's gonna ding you, is the bank. The bank is gonna look at this, and once we build our valuation model, our due diligence, VDR, they're gonna look at that, and they're gonna say, man, like what happens if they lose one of those clients? That's 20%, let now let's risk that model.

And they're like, okay, now we're only gonna loan 2 million instead of. You know, 3 million because we're gonna downside risk mitigate that. So clients, so tell us a little bit about that, because from what I would understand, you came in with probably no CRM system in the company you bought,

Pretty basic, which is typical of all of our clients.

Tato Corcoran: I can relate so hard because I came in and my seller had about a little less than a dozen clients. Customers. Now these customers are single-family home spec builders. So they are customers in volume recurring revenue, if you will. You're getting almost a hundred percent of the bathrooms for all of the homes that they build, right? And they're building anywhere from like 30 to 250 homes a year. That being said, I mean, huge customer concentration. If we only have like roughly 10 spec builders, three of which were our biggest by far, a super vulnerable place to be. And so that was one of the biggest initial things that I had to tackle outside of all the other things, but it was diversification,

right? Fortunately, that came hand in hand with growth, like I needed to and wanted to grow the business. And so the diversification is what kind of. Led the thought exercise around how we are growing?

Onesie, twosie Susie Q homeowners who are redoing their showers are single-family spec builders, we've grown that channel. And then apartments tons of multifamily, right? Going up or being renovated, et cetera. So, and again, those other two channels, like, didn't really exist and certainly not in great numbers. So I've really focused on building the two channels and then just nurturing all three of them and growing them as best we can. Tactically is like kind of a whole other podcast. I come from a real estate investment background, as you know, and many of the listeners know.

Chris Seegers: I love it. The other thing that just popped into my head. We have a pretty different model on how we approach our vendors and suppliers, and we actually see them as clients. I mean, we're trying to grow our businesses together, and so we've gotta figure out a way that we can work together long term where they make money, we make money.

So, a supplier concentration is another big thing. So, you know what, let's say you have a couple of big components that go into whatever you create, and all of a sudden, that group goes out of business. Like you're gonna be a host. So if a buyer comes in and they're gonna look at your, you know, at your customers and your suppliers, and they're like, man, you've got this one guy that's creating this component that you absolutely need in your manufacturing.

We've gotta get our supplier mix from this to this. Now that gives your team very clear action items. Okay? My job as a sales manager. Is to go figure out, you know, build a system around how we diversify it, just like you said. Okay. So we've talked about people, processes, clients, and then the fourth really big one is culture.

I. And culture is like a big, broad, encompassing thing that's not only, you know, how do you interact with your team? What are your core values? What's your purpose? But also, how does the marketplace see you? And how's your IP, how's your digital, you know, digital presence? All of those things have a lot of value.

Here are the other areas maybe that are deficient. And a buyer's gonna come into that and be like, Hey, I'm gonna pay additional value for that. So, talk to us a little bit about just culture, IP, how you've thought about it, because even your processes can become IP like this C, this CRM. It's gonna be an ecosystem for all of our training.

Everything we do, when we get it done, I believe it's gonna be something that no one has ever built. It's gonna be a multi-family office that's gonna allow you to raise capital, run the businesses like it's gonna be this whole ecosystem. When we get that done, I think it's gonna be worth tens of millions of dollars, and it's gonna take us probably three to five years or so to build it.

For your business, you're like, Hey, I'm not only doing my business, but for female-owned business owners. Like maybe there's this niche where I build this other thing that now has value, and when I sell a brand, this thing is an either a business outside that I sell that has value or it has additional value to the buyer.

But I'll just pause there 'cause that was a lot.

Tato Corcoran: I know. So many directions that you could go. So I. For me, culture hits home a little bit because I've mentioned this a couple of times. Like, I had to build my employee base literally from scratch. Right. I, when I took over, yeah. We had one kid who, the day I took over, told me he was headed to college in a month.

People just want to show up to a place that they're proud to show up, to be a part of something that makes them feel fulfilled in some way. Whether it's like. You know, you let laughs happen out on the production floor, right? Or, you know, a funny YouTube video, like going around the production floor when you really shouldn't be on your phone. Like, little things like that up to bigger things, that's, you know, having employees watch your business grow, and they know they're a part of it.

Chris Seegers: I love that. And you're a visionary. You cast a great vision, and there's a Bible verse that says something along the lines of where there's no vision, the people perish. People love to get behind somebody who's got a bigger view of life than they do, and that's really how we've had success. is our mission is to activate and equip others to live exceptional lives.

Most of them will say, I don't, I don't know. I can tell you exactly where we're going in three years, and then we have a blueprint for exceptional wealth, which is part of our financial advisory and wealth side, which is. Literally like, Hey, do you have a business plan for your wealth? No. If you don't, you need it.

We can't, like everybody that thinks, Hey, we're just gonna retire. Well, if you're in a W2 position, most of you guys are not gonna be able to, but you need a plan for that. You need a know right now, what do I need to retire? And then how far am I? And then build a blueprint to get there.

And that's where, so as, as we think about building businesses to sell, people always ask me, Hey, where do we start?

I said, you, first of all, do you know what your business is worth? Pretty much, I have not had one person tell me, Yes, I do. I know exactly what it's worth, or I've had it valued, you know, on a quarterly or every six-month basis. I'm like, we start there, let's value your business. And then we do a business readiness assessment, which is basically, and this is part of, we're certified exit planning advisors.

You, you need a million and a half more. Your liquid assets aren't gonna get you there, right? You're either gonna make up that gap with real estate or business. Those are the only two big levers that I've found in life that actually can help people grow wealth. And so, okay. What's the plan? Well, I don't buy real estate.

When we can get business owners in that position, they have a hundred percent leverage. Then if you have a health issue or if something happens, you have a grandkid, and you're like, you know what? I just wanna spend time with my grandkids. I don't want to be doing this anymore. Your business is literally ready to sell.

You know what it's worth, and you can go at any point in time. So we're, we're on this really big platform to help people get ready. And most of 'em, they might be three to five years out. And I'm like, Hey, let's sit down and let's talk through this because if you talk through it now, in three to five years, you're gonna know exactly what your business is worth or within margin, and you're gonna be ready to sell it.

If you wait till five years, you're not gonna know what it's worth, and it's not gonna be ready to sell. And you've got a whole other lag to that. So

Tato Corcoran: My dog has decided to chew the loudest bone known to

Chris Seegers: I was wondering what that was. I thought, I thought your husband was making some like

Tato Corcoran: I've, I've kicked him multiple times with no success, so hopefully someone can just pull that audio thread right out.

Chris Seegers: No, we're gonna just keep it in there. You know, we like it to be realistic. This is real life

Chris Seegers: No. No. They gotta do it right when you're ready to go.

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Chris Seegers: Okay. So thinking about that process, Tato, and even for you, because you know, in different businesses we buy, we're like, oh man, what is like, did we value the business?

Okay, let's get the valuation and then, hey, what is our goal? I. Some of our businesses, like the majority of our businesses, we wanna own forever.

Tato Corcoran: Yeah.

Chris Seegers: If they're ready to sell, I shoot. I could get hit by a bus tomorrow, and my wife is like, Hey, I, some of these I wanna keep running, and I want to go. And my brothers are like, yeah.

Tato Corcoran: So I am definitely not nearly as sophisticated as I should be. Like all of the, this podcast was for my own self, just as much as it was for all of the listeners, because it's something that I could be, and I'm sure most other people could be just so much better at so much better. With that being said, I do try to, at a minimum, when I'm faced with a decision, try to think, am I gonna make a choice that's relying on me or not relying on me.

And It's easier said than done. Especially when I'm like a super control freak, you know, a lot of higher achievers are. But I try to have that frame of mind of am I making this decision in the best interest of the business in the long term, or just in myself? Those two don't always go hand in hand, right?

Right. Versus it being like, I kind of hate when people are like, oh, this business is my baby. Like

I do understand that for sure. And I don't think it's, it's a bad thing. But

Chris Seegers: No, I do think it is a bad thing. I think you can love what you do absolutely. And be like, I'm so passionate about this business. But when your identity is tied up into your business, if that business is going terribly, guess what? You're gonna be in a really bad head space. If it's going great, you're gonna probably think you're way more valuable than you are.

I am awesome at business, and I wanna run great businesses, but my that's not my identity.

When we have a good or bad year, it's kinda like, well. Yeah, this isn't, you know, this is annoying if it's bad, or this is great if it's good. But I do think building enterprise value actually that is a great, like, I didn't even think about this, but this is a great demarcation point. Lifestyle business versus value business.

Lifestyle businesses. Yeah. Oh, this is my passion, this and that and the other. And it involves you and it requires you value creation business that's sellable, are not those things. And like I said, you can still be absolutely. Well, I love what we do. I'm gonna work till I'm 90 and I'm gonna keep working in these businesses and on these businesses, but I'm gonna have them be to where they don't require me.

Tato Corcoran: Yeah.

Chris Seegers: And it's like, it's gonna be 80% right, honestly, and it's gonna have a ton of things that you didn't think about. And then you take that and you build it for your business, or Hey, write me out an estimation process for a manufacturing company

Tato Corcoran: This is a perva, such a pervasive theme across entrepreneurship. I truly believe that if I had to choose one single differentiator between entrepreneurs who will succeed, and entrepreneurs who will either never get started or they'll give up, it is just starting somewhere. Just start somewhere. And that's exactly what you're saying. Like you just. If you open a Word doc and the process is get to work, sit down, eat a banana, go pee, leave, like whatever you

started, you know.

Just start like you said, and put a little into it. And then if it's like, Hey, I don't have the capacity to do this, let's do this. I'm releasing my second book buying Main Street, in June, and I know it's super exciting and it's way better than my first book, Every. I feel like every time you

Tato Corcoran: as should be.

Chris Seegers: And you're, you're in this one, so I'll send you a copy, 'cause there's a lot, there's a story that's totally about you and it's really complimentary, so you could use it. But anyway, like I wrote, the entire book. And then my editor edited it and was like, Hey, I need you to get this back to me within a week so we can be on schedule.

Build your businesses to always be sellable, and we're excited to have you back here in a month or so.

Tato Corcoran: Thank you so much.

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