Most business owners start exit planning with a number. Scott Snider thinks that's the wrong place to start.
Scott is with the Exit Planning Institute, the organization behind the Certified Exit Planning Advisor (CEPA) designation. I earned my CEPA through that program, so having Scott on The Decidedly Podcast with my dad Shawn and me felt a little like interviewing one of my teachers.
When I asked him where an owner's decisions begin, his answer was simple: personal first.
He sold his first business at 24.
Scott started a landscaping company as a teenager with a buddy, his dad's lawnmower, and a red Ford Taurus with the trunk bungee-corded down. By the time he graduated high school, it was a real business. In 2010, at 24, he sold it to a strategic buyer.
Even with a dad who was already a CEPA, Scott says he fell into the same trap he now sees in so many baby boomer owners: no personal planning. The sale was a whirlwind, and afterward he was, in his words, "a kid with a little bit of money trying to figure out what the heck was next."
Now picture an owner who spent 30 years building a company, not ten, and then sold it with no personal planning. Scott says they're left wondering, "What the heck am I going to do?"
Exit planning starts with who you want to be.
The first decision, according to Scott, is this: who do you want to be outside of your company?
He used himself as the example. He lives in a century home on the rural side of Cleveland and keeps a pretty quiet lifestyle. If he sold, he'd need a lot less money than the owner who wants to buy a minor league baseball team in the next act of his life. Neither one is good or bad, right or wrong. As Scott put it, "it just is."
From there, you add the rest of the picture. Kids heading to school or getting married. Other companies you might want to buy. Real estate. All the ambitions and goals you have for the next chapter.
That's what personal planning before exit looks like. It comes before the valuation, not after it.
Know your wealth gap.
Once those personal decisions are made, Scott calculates what the Exit Planning Institute calls the wealth gap. You start with your wealth goal for the next act of your life. You subtract the value of the assets you hold outside the business. What's left is what your business needs to be worth.
He walked us through a simple illustration. Say your goal is $20 million and you have $5 million in assets outside the business. Your wealth gap is $15 million. If the company is worth $15 million, selling now could be a real option. If it's worth $5 million, you either drive another $10 million of value into the company or you change your goals.
And Scott was honest about which way most people go: "Most people in general are not going to make the decision to reduce their lifestyle in retirement." That can mean a two to five year run of building value before a sale makes sense.
Shawn and I see owners do this backwards all the time. They pick a number because it sounds right, or because they're about that age. Scott joked that the number often comes from the guy they played golf with, who sold for about that much. There's not much calculation behind it.
Successful is not the same as significant.
Scott draws a sharp line between a successful company and a significant one. Plenty of companies look successful: a solid P&L, a solid balance sheet, happy people, good culture, good customers. Yet when the owner goes to sell, the business sells at a discount, or doesn't sell at all.
To Scott, a significant company is valuable, transferable, and aligned with the owner's business, personal, and financial goals. Whether the owner is 40 or 70, a significant company is always ready for an offer or a pivot.
Scott estimated that something like 70 percent of the companies put on the market today don't sell. A big part of the reason, in his view, is the intangible side of the business. He described four intangible capitals that he says drive about 80 percent or more of value:
- Structural capital. Process documentation, systems, IT, intellectual property, and equipment.
- Human capital. Your people.
- Social capital. Your culture and internal communication.
- Customer capital. Your customer relationships.
A CEPA scores each one with the owner on a scale of one to six. Scott likes that the scale has no middle. If you feel average, you have to choose: slightly below or slightly above. Those scores help show where a business might fall in its range of value, and what work could move it.
Start working on your life.
The line from this episode that stuck with Shawn and me was Scott's twist on a familiar piece of business advice:
We hear all the time that we need to stop working in our business and work on it. But there's not a lot of people asking us, saying, hey Scott, you need to start working on your life and stop living in it.
Scott admits he let his first business define him. He was "Scott Snider the landscaper." After 20, 30, or 40 years of running a company, that identity runs deep. But in his view, the business is meant to drive a more personal purpose, not replace it.
His test for any big decision is one question: is this on purpose for me? If you can answer yes, and it matches your core values, you can move forward. That answer shapes the kind of exit you pursue, whether internal, external, or a sale in stages. It shapes the value you need and your wealth gap.
We see what happens without that answer. Owners who haven't decided who they want to be on the other side often hang on too long. They retire in place, the business stops growing the way it did when they were fully engaged, and the value they meant to sell slowly erodes.
Three ways to defeat bad decisions.
I asked Scott for his advice to owners thinking about selling. He gave us three:
- Ask if it's on purpose. If you've spent no time on your personal purpose, start now, especially if an exit is on the horizon.
- The truth is enough. Put everything on the table with your advisors, the good and the bad. Scott pointed out that a lot of deals die in due diligence, and a plan built on missing information leads to poor decisions along the way.
- Slow down to speed up. Aligning your business, personal, and financial goals requires time. The focus is right now, not the day you exit, whether you're 30 or 70.
Start the conversation.
A real exit strategy for business owners doesn't start with a buyer or a multiple. It starts with you. Before you get deep into selling your business, decide who you want to be when it's done.
That's the heart of how we approach exit planning here in Fort Worth. If you've been thinking about what comes next, even casually, I'd love to have that conversation with you. Book a free conversation and let's talk about your five key decisions.
This article is based on a conversation from The Decidedly Podcast. Insights, advice, and comments provided by Sanger Smith, Shawn Smith, and guest speakers should not be considered personalized financial advice or recommendations. This content is produced solely for informational and educational purposes. For personalized guidance, book a free conversation.
