Exit Planning with John Ovrom

george grombacher 0:00
Hey, what’s up this George G and the time is right on today’s guest strong a prophet John over. John, are you ready to do this?

John Ovrom 0:08
Good morning, George, very excited to get started.

george grombacher 0:10
All right, let’s go. John is an entrepreneur. He’s the president and founder of exit Consulting Group. It’s an organization developing roadmaps for business owners anticipating making a transition. John, tell us a little about your personal life’s more about your work, why you do what you do.

John Ovrom 0:28
Thank you, George. Well, like most entrepreneurs, we didn’t end up we ended up where we are, we didn’t, we didn’t have this vision and goal to always want to sit in college going, I know I want to grow up and I want to help people get out of their business. That was, there’s always a path on where we are. My path has been, I’ve always been an entrepreneur. But when I did a transaction and sold my first company, I was really disappointed in the process, not just in how it went, but also how unaware and how naive I was, because I was in the street fight of running a company every day. And I just thought it would be like selling a car, selling my house. It’s a transaction. And in reality, and what we’ve been doing the last 18 years now is helping owners understand it’s about a transition. It’s not about the transaction, it’s really, the transaction can happen, you can get good and smart people around you to tactically execute help you legally pricing tax. But the hardest part is the transition. And how are you as an owner going to get out of a business? And what is that what is your life look like? After that, we need to everyone needs to spend a lot more time on the transition, and what that’s going to look like. So that’s where I’ve gotten in, I didn’t plan this, it was more just helping friends after me going through it. And then ended up just continuing to try to help. And as you keep doing what you’re doing, which is trying to get better. And I want to live, what a live my message, my message is plan an exit, it’s not going to be as easy as you think it’s going to be. And I would say the biggest thing we have learned is people do their business, because that’s what they love to do. Most business owners aren’t doing it because they can say they’re doing it for money or freedom or flexibility, but they’re doing because they love it. And you’re not gonna get Tom Brady to come off the football field, you know, you’re not gonna get LeBron James gonna come off the basketball, you’re not gonna get a successful business owner when they’re making money, and everything’s clicking to go, Okay, I’m 65 I’m 70 You know, my wife is sick, or my life is not balanced, or whatever the reasons are, to tell them to walk off the field or the court. Because if they, they question the relevance. And I think if I was to tell me, one of your message, any of your listeners is, it is about finding relevance in something outside of work. The key to a strong exit. And a key to a very successful exit is I have something outside of work that will fill me as much as who I am. Because entrepreneurs are who they are. LeBron James is who he is. He’s been playing basketball since he was two, how do you tell someone who has at their peak of their career, and all of the accolades, and everyone loves him and everybody to say, just walk off and go do something else? Business owners have the same problems,

george grombacher 3:40
to how do you do it?

John Ovrom 3:43
Well, you know, the Great, the great thing about life is, you know, eventually everyone exits. And this is what I tell them, I don’t have to convince you that you is something you want or you don’t want, you’re going to exit in a box, or you’re going to exit on your feet. The question is, who is going to plan this business? Exit? Do you want to? Or do you want your widow? Do you want your heirs? Or do you want the state, but someone is going to? And so the question really becomes not, not if and not when but who and just because you plan, it doesn’t mean you have to do it, but at least put the plan in place. So I had someone who was 82 years old, and he thought it would be a good idea to start planning his exit because he has some things to get done. I’m not judging, that’s great. If at 82, you’re ready to go than 82 isn’t great. I don’t care if you’re 60 or 40, or there’s no judge, but at least start. There was another one who said John, I plan to die at my desk. That’s my exit. And I said great. Please get me a million dollars life insurance just for the company. So when you die, we can hire someone a CEO to step into things give us a year to clean up the mess that you have made. allow us the opportunity to find value for your heirs. And then that gives us enough money to then do the transaction and your wife, your widow, your children don’t have to deal with it. So I’m totally good with dying at your desk, just don’t make everybody else deal with your problem, because you’re the you’re the entrepreneur. And so if you were willing to plan ahead, and you’re willing to talk to people, and we’re willing to build the strategy, great. But if not, leave me the money and let someone else don’t just say that somebody else’s problem. But similar to trusts and other documents, people don’t like to think about what that’s going to look at the end, or I’ll deal with it later. And unfortunately, we get called too often from a state attorneys and say, Hey, I’m working with a widow. Entrepreneur died, they bring us to live enough this lifestyle. They’ve been running a lot of personal expenses through it. They’ve been running a lot of product they’ve been he’s working a lot hours, but now he’s not around, and what are they going to do? stuff?

george grombacher 6:04
Yeah, they call you in for cleanup, as opposed to, I was just thinking about that the other day talking about how an ounce of prevention is worth a pound of cure. And I’m sure that applies here. Yeah.

John Ovrom 6:17
But I think, you know, the personality around an entrepreneur, particularly founders, G ones, the generation one founders, they’re very much street fight and, you know, get up, I’ll you know, I’m first one and last one out, no one else can do it. You know, it’s a wagon wheel. I’m in the middle, everyone reports to me, right. And you can’t take that personality out of them. Just just because they’re 60 Doesn’t mean they still don’t have that cowboy mentality. And we’ve seen in businesses where it’s a typically it’s, it’s it’s run, where it’s more owner operated. And it’s a lifestyle. It’s not professionally run with a management team. And most of these owner operated lifestyle businesses have no strategy, they have no middle manager, they don’t care about customer concentration, they haven’t invested into SOPs and technology with it stacks, they literally are running their job to do their job. And they love what they do. And that’s completely fine. There is no, just make sure that this asset, if you want any value, that you have enough money to protect, so somebody else can do it without affecting their life. That’s, that’s my pitch. If I get anyone George to do that is just don’t leave it to other people. You figure it out.

george grombacher 7:38
Which is so appropriate, because because that’s, that’s what they’re used to doing anyway. So

John Ovrom 7:44
yeah. But looking yourself in the mirror saying I’m going to be done and what why do I want to be done or timing is, is one thing, planning is one. So it’s an exit strategy. And we call ourselves exit consultants. Because we actually help people through the process. We don’t just say here, you need to do it. So you know, in a building’s in a building world, the first step is what do you want? You want a three bedroom, two bath Spanish style, right? Single Story? Don’t you know, two storey 10 foot? Okay, let’s just at least architecture Temo do you want in your exit? You have how many kids do you want them to have? So you have a key employee? Some one of the kids is working in the business? Like what what do you want your exit to look like? Just just work with the vision of how do you see this wind, then what we do is we would send it over to the engineers to figure out the structural and electrical and plumbing all the mechanics to it. And so you want to bring your CPA and your financial planner and your attorneys, you want to bring everybody in to say okay, guys, here’s an estate that has a goal. How do we design this when, then you can build it when you want? You know, I’m not saying an exit plan has to be executed. But so many people wait to say I’m like, Okay, now I’m ready. Because I want to plan it, lay it out, tweak it live in it, say this is my thoughts, keep communicating. And then when you’re ready, then do it but don’t not plan it because you’re saying you’re not ready to exit. A match. George got a question for you. Okay, so when I go meet an owner, and I say, When do you think you want to exit? What do you think the average length of period of time that people say I’m going to exit? Yes. How much time? Do you think they are far away from exiting? What’s What’s the typical answer I’m getting? Are you four hours or 10 years? Negative, sir, five years? It’s either now or five years. Okay, because five years is far enough away that they don’t have to do anything today, but close enough for them to go. Yeah, it’s over there. And every year, they’re five years away every year, or it’s, you know, drop the mic. I’m done. I’m out. Just frickin get rid of this thing for me. I’m done. So those are those are my two answers. And yeah, five years. So like employees or their children will come and say My dad said he was going to sell me this company. And he’s been telling me this every year for the last 10 years. And he’s always five more years.

george grombacher 10:14
How often does that happen? Where where it is, the kid are?

John Ovrom 10:20
Yeah, internal transitions are simpler in the world of, for an owner, the concept of hey, particularly as a parent, they believe that they’re doing this for the child. And unfortunately, just because your child has your last name, does not make them qualified to run a company. And we will, I will tell you, much more than not, I would probably say three quarters of the time, the children are not on only qualified, they’re actually a train wreck. And we have to tell the owners, if you want your child to have it, just understand, you’re not looking out for this company. Because this company is a child, what you’re doing is telling me that I have this child that is growing up that you’ve been a helicopter parent on the whole time, and you’ve been controlling it, and now you’re going to force them to marry this other person who’s completely unqualified, the company’s not going to survive, and you’re going to lose people. And then their brothers and sisters are going to hate them. And you’re going to be frustrated at Thanksgivings. And Christmas, because they crashed because you thought it was really easy. So typically, the reason it’s because owners were really bad at managing.

george grombacher 11:35
So that’s the opposite of engineering value. That is that is systematically destroying the value is child takeover.

John Ovrom 11:43
It’s running a company emotionally instead of professionally, right, it’s an owner operated, sort of professionally managed. So if you’re looking at your company, and you’re saying, I want my child, my company to survive, who is the best person? Oh, you know, I have been promoting and training this child or this manager or this key employee or whatever. And we see it in key employees as well by they’ll try to pass it down to these people that have always been there. But they’re their employees, they’re not owners, there’s a difference. You can’t just promote someone by title, and then go, tada, you’re in charge. It’s just not that easy.

george grombacher 12:23
So that’s working to figure out what is it that that you really want your interest to maybe not necessarily in handing the business over to John or George, who is going to be the new CEO. That’s not necessarily what you want, you want to make sure that the business is going to keep providing a certain kind of lifestyle or income, or job for George.

John Ovrom 12:45
Correct. You start with what’s the legacy you want. When you’re sitting 10 years after we transact? Are we close? Or are we shut down, or you handed over whatever doesn’t matter what your exit is, there is no right exit. When when you’re sitting on it, when are you going to look back and go that was that was a great run, like no regrets. And sometimes it’s about the legacy. I just wanted to give this opportunity to my employees to my kid to something those are what Aesop’s are. Sometimes it’s family members, sometimes it’s a liquidity event that they need, and they need a certain amount and they can live in, they don’t really care who’s got it, it’s just money, right? I need enough money. So I can live I’ve paid my dues, I just want some money. Sometimes it’s they they want to have a slow exit, I want to go down to four days a week, then three days a week, then two days, I can’t really leave, I just don’t want to be in charge. And so they kind of want to wind down and they just want to have the place to go. They just don’t want to be responsible. You see that a lot in service providers. Like you’ll see that in financial planners, right? They never seem to die, right? They just always seem to just, they just have less and less clients. They don’t go get new clients, right? They just kind of tail out. Attorneys CPAs financial planners, right? A lot of professional services are that way because they’ve built a beautiful personal equity. But they’re just going to kind of let that ride out because their work or their friends. And, and their value is in their business. And they don’t want to walk away yet. And they don’t have to. It’s not like you’ve got to compete at the highest level in some professional services. So it depends on their win. And there is no right or wrong answer. It’s yours. It’s your cup, whatever you want to do. Shut it down is a great answer. Liquidation is an absolute great exit. It is not a failure.

george grombacher 14:35
So it really is a function of what is it that you want.

John Ovrom 14:41
I mean, for the for it to be successful. We always have to kind of focus on who we are and why we’re doing it and that’s where business owners just get tired. That’s why it’s funny because right you were saying you know, 20 seconds or 24 hours I want to be done. You know how many times in our business career have We just, you know, sad in the long run on and I’ll be honest, right? Sit in my closet, you know, on my hamper going, here we go and my wife sees my, my head down as I’m trying to put on a pair of pants and she’s like, are you okay? And I go, Yeah, I’m just I gotta get my head and again, like, I gotta suck this thing up, I’m tired, like, I gotta get back into the cage and go fight today. And, you know, just give me five minutes, and then you get your mind set, you’re like, Alright, let’s go. Because people don’t understand how much work it takes for LeBron James or a Tom Brady or for an entrepreneur to be successful. And it’s, it gets tiring in some days, you just sit around and go, I’m tapping COVID was a great example of that. Right? Anybody that was waffling was like, Okay, you either jump in, or you jump out those were, that was a great differentiation there.

george grombacher 15:56
It seems like entrepreneurship, if you’re on social media has never been more popular. But in the real world, the companies that you’re working with, that you that you spent time with? Are is are the younger generations excited about entrepreneurship? What is your perspective?

John Ovrom 16:16
Well help, I’ll get your opinion, right? How do you define entrepreneurship? I was having this discussion at my local college where I was where I was teaching here on there. It’s an entrepreneurship class. Okay, what is the definition of an entrepreneur?

george grombacher 16:28
Is Yes, in this context, I was talking about owning and operating a business.

John Ovrom 16:34
Okay? Because that was saying, if you’re a doctor, if you’re a dentist, are you an entrepreneur? If you’re a financial planner, are you an entrepreneur? Right, right. So I think entrepreneurs personally, the reason I’m asking is because personally, I think entrepreneurs is an attitude. Okay. I think there’s a difference between being a business owner and being an entrepreneur. Okay? This is my own fantasy, this is my own, but being an entrepreneur, because as an entrepreneur, I have learned, I’m not going to call it as a dysfunction, but it is it is who you are, right? Like, if somebody wants to join the military, as a military, that’s who they are. If you want to be a musician, you’re a musician, right? If you’re gonna be, if you want to be an entrepreneur, you’re an entre, I don’t, it’s not that I want to, I don’t want to be an entrepreneur, I am one. I’m just driven. I work too much my life, work life, I just love what I do. I want to compete. I don’t want to just run a business, I want to win. And I want to grow and I want to build. So an entrepreneur in my world, in my vision is someone who’s trying to take an idea or a concept, or a product and make it something beyond them. They’re making a business, they’re raising a child, this thing, this company is going to go and grow and get big. I think most people want to be business owners, or solopreneurs. And that’s where I see the younger generation is I think they have a lot of they want the freedom, the flexibility, the choice, it’s all about me, let me take a photo, let me carry around my stick. It’s all it’s not about taking something, making it bigger than them and then letting it go and growing. So I see a lot of I graded a master’s program and six of the 10 proposals that were brought, were apps. is making an app or business is it? Is it an entrepreneur? I mean, it is. But what are you doing? You’re connecting to people? Great, great. So I don’t know, this is this is a personal is a great question. Right? So what is the definition as an older business owner, it’s going, you know, drag your knuckles in the mud, you know, get up and street fight and hoe rod, you know, I’m a business owner. And that’s not what the younger kids are looking at. They’re looking at trying to work smarter, have the flexibility have the freedom. That was never a conversation if we weren’t working Saturdays and half of Sundays and trying to hide from our wives and our kids, because we had to make a couple phone calls, why we’re supposed to be at a soccer game or something. We’re not working like that. That’s, that’s not the same as what I’m seeing right now.

george grombacher 19:24
Yeah. That makes sense. Well, John, thank you so much for coming on. Where can people learn more about you? How can they engage with you and exit Consulting Group?

John Ovrom 19:34
Thank you, George. So again, this is John over, you can find me on LinkedIn, you can find us around but our best location is our website, which is exit consulting group.com all one word exit consulting group.com has the best way to contact us has all the information has everything that we have, and would love to be able to help anybody who’s interested in exploring their exit. Thank you, George.

george grombacher 20:00
slept well if you enjoyed this as much as I did so John, your appreciation and share today, share with a friend who also appreciates good ideas, Go to Exit consulting group.com and check out the great resources that John’s got on the site. You can find him on LinkedIn as well. I will link all those in the notes of the show. Thanks. Good, John. Thank you, George. And until next time, remember, do your part by doing your best

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