A.) PERSONAL NOTE from Mark

We just wrapped up June and that means Restaurant Week here in Las Vegas is over. I enjoy the opportunity to visit new restaurants I normally would not have gone to, and re-visiting long-time favorites.

Restaurant Week is also a great reason to reconnect with friends. Sharing time and a wonderful meal with those people I love and appreciate helps recharge my “batteries.”

As we head into the heat of summer, how do you keep your batteries charged, energy up, and motivation high?

B.) ARTICLE

Since this is a new newsletter (and to be perfectly honest, I'm not sure how many there will be), I thought I’d logically, start with the end in mind.

When applied to business, "beginning with the end in mind" is a strategic approach that involves envisioning your ultimate goal for your company to guide current decisions and actions. This concept, popularized by Stephen Covey in "The 7 Habits of Highly Effective People," emphasizes the importance of having a clear understanding of your destination from the outset.

The Core Principle

The philosophy suggests that all creations happen twice: first mentally and then physically. For a business owner, this means clearly defining your "endgame" — what you want to happen to your business in the future. This isn't merely about setting a goal; it's about establishing a clear roadmap for your entrepreneurial journey that simplifies decision-making.

Tailoring Your Strategy

Your defined endgame dictates your business strategy. For instance:

  • Selling to a strategic acquirer If your goal is to sell your business to a strategic acquirer, your efforts should concentrate on enhancing the uniqueness of your primary product or service. This specialization makes your business a more attractive acquisition target because a larger company might find it difficult to develop such a differentiated product or service independently.
  • Passing to the next generation If you plan to pass your business on to your children, a different strategy would be to diversify your product and service lines to create a steady cash flow for your heirs.

"Jogging vs. Training"

The distinction between operating a business without an endgame and with one can be likened to jogging versus training for a marathon. A casual jogger runs without a specific goal, staying within their comfort zone. Similarly, many business owners manage day-to-day operations without a long-term vision, often leading to stagnation and missed opportunities for significant growth. In contrast, a marathon runner has a clear destination and a target time, making every training session purposeful. Similarly, a definitive endgame for your business — whether it's selling to a strategic acquirer or ensuring a smooth succession — transforms your entire approach, ensuring every decision is a calculated move toward your ultimate goal.

Defining Your Endgame

To achieve clarity and precision in your planning, there are four key questions to answer when defining your endgame:

  1. What's Your Endgame? Clearly articulate your desired outcome. Options include passing the business to your children, selling to a strategic acquirer, or engaging in a majority recapitalization with a private equity group. Each scenario requires different strategies and preparations.
  2. When Do You Plan to Transition? Establish a timeline for your exit. An imminent exit might lead to strategies focused on increasing intermediate-term value, while a more distant goal allows for a focus on long-term stability and growth.
  3. How Much Money Do You Want to Walk Away With? Quantify your financial ambition by determining your "walk-away number." This figure will guide your strategies for growth, investment, and potential partnerships.
  4. How Close to Your Walk-Away Number Are You Now? Understand your business's current valuation and the frictional costs associated with selling, such as taxes, legal fees, and M&A advisor fees. Identifying this gap helps in strategic planning and resource allocation.

The Power of Writing It Down

Writing down your endgame provides a significant motivational boost and serves as a constant reminder of your objectives. It acts as a checkpoint, preventing you from shifting targets as you approach success and ensuring you celebrate milestones while staying focused on your ultimate goal. Research supports this, with studies showing that individuals who write down their goals are significantly more successful in achieving them compared to those who do not.

Timing Your Endgame

While it might seem logical to time your business exit with economic peaks, this is often a "waste of energy." When you sell, the proceeds are typically reinvested into other asset classes that are also affected by the same economic cycles. For example, a seller who waited for an economic peak might receive a higher valuation for their business but could then see the value of their reinvested funds drop significantly if the market subsequently declines. Conversely, a seller who sold at an economic trough might receive less for their business but could see their reinvested funds grow considerably as the market recovers. The key takeaway is that the relative performance of asset classes tends to move in tandem, making it difficult to gain an advantage by timing the market.

The “best” time to sell your business is when you can answer in the affirmative to these two questions:

  1. Are you personally ready to exit your business?
  2. Is your business ready for you to personally exit?

C.) COOL TIPS and RESOURCE

Check out these two resources that consider keeping the end in mind.

“The Art of Selling Your Business: Winning Strategies & Secret Hacks for Exiting on Top” by John Warrillow

“Endgame: Designing Your Business for the Ultimate Reward.” my FREE eBook 

D.) UPCOMING EVENTS and ACTIVITIES

July sees the kick-off of my Q3 book club, we’ll be reading “Built To Sell: Creating a Business That Can Thrive Without You.” If you’d like to participate, let me know, it may be a bit late, but I’ll try to get you up to speed. 

E.) CONNECT WITH ME

Facebook: https://www.facebook.com/mark.mraz.94

LinkedIn: https://www.linkedin.com/in/markmraz/

Zoom: Schedule a quick 15 minutes: "https://scheduler.zoom.us/mark-mraz/connect-with-me"

Stay safe, be well, and do good