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SELL ANYTIME:�The Power of Readiness

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Opening

I want to tell you about my life circa 2009. I had graduated near the top of my MBA class, I was just about to pass the third and final level of the CFA exam, which is a HUGE deal, but I was working for my family. And I was bored. And poor.

Pivot

And then to top it off, I was at a children’s birthday party talking to one of my childhood friends who looked at me, found out I was running a law firm, and with a look of disgust mixed with pity told me, “You can do so much more than that”.

15 years later and I still remember exactly how I felt when Walton said that. And the reason I remember is because he was right. And I knew things had to change.

A couple of years later I started my fractional CFO company and I had definite ideas about what I wanted it to do. Mostly that it had to be profitable – but profitable is more than just money.

Now I have a role that enables me to travel constantly. I’m making multiples of what I was making when I worked for my family. I am constantly challenged, learning new things that not only benefit my company, but also my clients’ companies. And I am building equity in a firm for which I am already getting offers.

Cathcap is profitable.

I believe

I believe there is more to profit than money. And I believe that every founder has the right to establish and achieve their definition of profit.

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01

02

03

PROFIT

How do you define it?

VALUE

What increases value?

SALE-READY

Why sale-ready now?

SELL ANYTIME

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01

PART ONE

SELL ANYTIME

PROFIT

How do you define it?

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THREE KINDS OF PROFIT

MONEY

TIME

REPUTATION

There is Money Profit, Time Profit, and Reputation Profit.

I think you all understand what Money Profit is. Revenue minus expenses. And yes, I believe that there is a base level of profitability that all companies should achieve. But bigger isn’t necessarily better. The question is, what are YOUR financial needs. Both today and in the future?

Time Profit is the second kind. I also think of this as freedom. That made all your ears perk up. When I started Cathcap I wanted to work 4 days a week or 3 weeks a month so I could travel. I haven’t quite achieved that, but I do have the freedom to spend months at a time out of town (working). How much time or freedom do you want?

And the last kind of Profit is Reputation. This is the one that Walton kind of stepped on with his pity comment of, I could do better. I could see it in his eyes, he thought less of me because I was underachieving. Now, do I really care what Walton thinks? Not really, sort of. But it hurt because I knew it was true. And yes, I want people to think of me at my full potential. I want to have a good reputation, be thought of as somebody who did something or accomplished something.

Profit is a balance of these three ingredients. And you are the only one who can define it for yourself.

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CASH �TODAY

CASH TOMORROW

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02

PART TWO

SELL ANYTIME

VALUE

What increases it?

MOVE TO CENTER OF STAGE

One of the things that people usually point out to me when I talk about these things is, “Hey Brooke, what I need now might not be what I need in the future”. And you’re right, it’s not. Our companies are our biggest asset, and while we are going to pull money out of them while we are operating them, very often, the big payout is going to come when we sell. So we need to be ready to sell big!

I wrote a best-selling book that came out this spring called Exit On Top and it is all about getting your law firm ready to sell. But the lessons in it apply to every company because the themes are universal.

In the book I identified a few places that if you could tighten them up, make them run well, look good, they would have a big effect on your valuation. And here are the top 3.

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FINANCIALS

Rule of Thirds
Produced Quickly

SELL ANYTIME

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PROCESS

Document the 20%

That gets 80% done.

Document your procedures. I’m an EOS Implementer so I believe in taking a 20/80 approach to this. Document the 20% of the procedures that get 80% of the work done. And document 20% of the steps that get 80% of the task completed.

There are a couple of reasons for this.

If you think you have to document everything, you won’t get it done.
If you do actually document everything, you will end up with a 700 page SOP manual that nobody will ever read.
God forbid you change a piece of software or get a new vendor. Can you imagine having to go through and update all of those things?

If you haven’t done this, I suggest reading Process by Mike Peyton. It really changed the way I think about documenting processes and made the whole topic much more palatable for me.

Why are documented processes important? A buyer wants to make sure that if something happens, to you, to a key employee, or even if there was a mass walk out, that the company could still be run.

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WHAT ARE YOU DOING?

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UPDATE PROCEDURES

WHERE DO YOU SPEND YOUR TIME

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03

PART THREE

EXIT ON TOP WITH NO REGRETS

SALE-READY

Why do it now?

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75%

PROFOUNDLY REGRET

Selling in the first 12 months

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2 YEARS

Improve Financials

3 YEARS

1 YEAR

Ideal Financials

6 Months Marketing�6 Months Due Diligence

TIME TO FULL EXIT

2 YEARS

WORK

The other reason I don’t like the deal with it later approach is because it takes time to prep to sell.

You need to have at least 3 years of clean profitable financials. If they aren’t there, it usually takes 2-3 years to make them better. Then it takes time to market your company. Let’s say 6 months – that’s pretty fast. Then 6 months of due diligence. Again, pretty fast. And as much as you think you are going to sign the deal and walk away, chances are slim that will happen. You will be tied to that company for anywhere from 1-5 years. When you add all that up, you are looking at 8 years. Best case scenario, 8 years to sell and be done. If you wake up with a new grandbaby and want to sell, they will be 8 before you can spend most of your time with them. Is this really something you should wait on?

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WHAT IS YOUR IDEAL LIFE

WHEN DO YOU WANT TO EXIT

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EXERCISE

QUESTIONS

Exercise:

I want to take a couple of minutes here and let you think about what we’ve talked about today. I want you to think back to the very beginning when I talked about the three different kinds of Profit – Time, Money, and Reputation. And I want you to define Profit for yourself. How much Money? How much time? And what do you want your reputation to be. And then, here’s the impactful part, what needs to change so you can achieve that?

As soon as we finish this I’m going to take a couple of questions before I wrap up – so while you’re writing down your next steps, write down your questions too.

Q&A Now, if I don’t get to your question, I will hang around in the room or just outside the door for a while so you can just come ask me.

But I want to start with the one I get asked most often – Brooke, What’s the difference between the way I’m running my company now and running it like I’m going to sell it? I love this question because it is all about mindset and the way you are looking at the future – basically, it is about Vision. There are two awesome Dan Sullivan books that I think address this. They are Who Not How and 10X is Easier than 2X. What both of these books encourage is for you, the owner, to take yourself out of the day to day of the business and be a visionary. Look at where you are going, not at the tactical of how you are going to get there. If you are head down, executing the tactical every day, you are only going to make incremental progress. This is one of the reasons I love EOS so much. It helps you get 3 things – Vision, Traction and Healthy. You and your team know exactly where you are going, you are all rowing together to get to that destination, and you are functioning as a cohesive happy team of people who like each other. EOS allows you to set the vision, and the rest of your team to execute it.

Tactical Close

Grass Roots Transition

One of the most common questions I get is, Brooke, in the past I haven’t been on the same page as my spouse. Can you help me with that?

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Next Step

EXIT ON TOP WITH NO REGRETS

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Think past the sale:

I want you to:

Tactical Picture a day when you have all the cash you need for today and for the future.

Audio Picture a day when people come to you for advice because of your impeccable reputation.

Aspirational Picture a day when you have the freedom to spend your time however you want.

New Closing Story – Take Action

I want to circle back to that children’s birthday party and the comment my friend made. At the time, he pointed out the obvious, I was not living a profitable life.

When I started my company just a couple of years later I was very conscious of my definition of profit.

Money Profit – it had to support me now, and I needed to be able to sell the company to fund my retirement. Because of that, my name was never associated with the company name and I knew we would need to move away from me as the face of the company as soon as possible. I implemented EOS when we only had 4 people in the company, and now, my Integrator runs the day to day operations of the company and I just do a few speaking engagements like this one.

Time Profit – I wanted a lot of freedom in the new company. For myself and for my employees. I started a virtual company where my team and I can work from anywhere. Our hours are flexible and nobody on my team has ever missed a school play, valentine’s Day party, field trip, or other important personal event. When my nephew Walter was born, I used to have Walter Wednesdays every Wednesday afternoon until he started going to school.

Reputation Profit – We are a helping company. We make a difference in the lives of our clients and their employees. We become part of the client’s team and support them. This and other aspects of who we are come through our strong core values which we live every day and helps spread our reputation.

SQUARE UP

Cue the ending:

I will leave you with one last thing.

Repeated Stem:

You deserve cash profit

You deserve time profit

You deserve reputational profit

Because you deserve your definition of profit.

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Thank you!

www.brookelively.com

brooke@cathcap.com

817.317.8093

CONTACT INFO

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/CathedralCapitalCFO

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