[00:00:00] Host – Grace Jennings-Edquist: What if the key to a stronger business and a stronger team is actually making them less dependent on you? In this week’s episode, we explore what happens when business owners and leaders step back, creating organisations that can thrive without relying on one person to drive them forward. First, Simon Bedard, author of ‘Exit Like an Expert’ and managing director of Exit Advisory Group, explains why reducing owner dependence can create a more valuable, enjoyable business and give owners greater freedom whether they sell soon or not. Then I speak with leadership specialist and director of Bluestone Edge, Errol Amerasekera, who explains why great leadership isn’t about having all the answers, but creating teams that adapt. Drawing on his book ‘From Fear to Flow: The Adaptive Safety Revolution’, Errol shares practical ways to build adaptive teams by encouraging curiosity, vulnerability, and diverse ideas. From SoundCartel. I’m Grace Jennings-Edquist, and this is Business Essentials.
Why exit planning is really business planning
Most business owners spend years thinking about how to grow their business. Far fewer spend time thinking about how they’ll eventually leave it. Simon Bedard, managing director of Exit Advisory Group, says that it’s a bit like driving along a highway without ever considering where the off ramp is. Through his work with business owners and in his book Exit Like an Expert, he argues that business planning really is exit planning and that the healthiest businesses are built with the future in mind. Simon begins by explaining to Nicole Goodman why the best exit plans start much earlier than most business owners realise.
[00:01:39] Simon Bedard: In our company, we always say exit planning is like a dirty word. People don’t want to talk about it. It’s kind of like sitting down with somebody and saying, hey, let’s have a coffee and talk about writing your will. Like everybody knows you need a will, but nobody wants to talk about it, right? But I think there’s an element of people who go into business entrepreneurial style. People are hard wired for growth. They’re hard wired for the opportunity and all this sort of good stuff. And talking about exiting in some ways just goes against the grain. They’re just not wired to think like that. Other people are super emotional about their business and really attached to it. It’s part of their personality and who they are. And the discussion about exiting that business gives them a sense of abandonment. I’ve had people recoil when I’ve mentioned exiting and being prepared for it, and so it’s deeply personal. It’s deeply emotional. And frankly, my business is built on this premise. I believe we all exit our business one day, whether we like it or not. And so you can either plan for this and work out how to make the absolute most of the situation and kind of end on your own terms, or you can get carried out in a box.
[00:02:58] Simon Bedard: I mean, like, it’s up to you, But, you know, I think we’ve talked in previous chats about valuation and timing being flip sides of the same coin. Risk and opportunity are flip sides of the same coin. Well growth and exiting are just flip sides of the same coin as well. I liken this to driving down a highway. You know you’re heading north. You know where you’re going. That’s cool. But we also know that highways have well structured and very logical off ramps, right? There are set places so that you can get off the highway safely intact. Everything’s in order. If you just wake up one day and go, I want out and yank your steering wheel left. Well, you’re going to crash. Now, you might not know whether you want to get out in the next third exit or the 10th exit from now. That’s okay, as long as you’re heading in the right direction and just recognizing that at some point you’ll grab one of the exit ramps that are most appropriate for you. But, you know, kind of helping yourself understand how to exit, how to actually engage that merge lane, how to do it all, recognizing that there’s a timing element that will come into play. It’s actually just part of the journey.
[00:04:07] Nicole Goodman: What does an exit ready business usually have that a less prepared business is missing?
[00:04:14] Simon Bedard: Awareness. For starters, just awareness. They understand what to expect. They understand how people are going to look at their business. They understand some of the problems that may surface. They may not. The first thing they need to recognize is you need a deal team. You need people around you who are the experts in their field, who will help you navigate this part of the journey. At the very least, when you’re selling a business, you need a commercial operator. Somebody who runs a transaction and manages all the commercials, manages the negotiation, protects you from some of the awkward and difficult conversations that are going to happen. You’re going to need a lawyer to draft contracts, and you’re probably going to need an accountant or a CFO or somebody from the financial side of things to hold your hand, go through the technical stuff and also protect you from the arguments and the fray that is going to come down that channel. So recognizing that this is a very dynamic thing, and while the stages of an exit are probably the same, your journey through that framework will be so unique to you because of who you are, what your business is like, the timing in the environment, the people you got around you. And then of course, the buyers who are sitting on the opposite side of you. There’s a lot more involved than what people recognize. And I just think people have they just don’t give themselves enough time to learn and understand what that looks like and get the right people around them to tackle it. Mhm.
[00:05:42] Nicole Goodman: You’ve talked a bit about owners being attached to their business quite significantly in some instances. How does reducing dependence on the owner improve the business now, not just at the point of sale?
[00:05:57] Simon Bedard: I think there’s two elements to this is one, there’s an impact on value and two, there’s an impact on your actual enjoyment. You know, a business that’s saleable, like truly saleable. It’s built for all those kind of conditions we’ve talked about is typically more profitable and typically a lot more fun to run if you’ve got an owner. And let’s be honest, this is very common for small business owners, particularly in Australia. They’re working 60 to 80 hours a week. Like that’s insane. You know, how much life balance do they get? How much you know, time with family? Are they giving up? You know, the sacrifices are huge, right? You get that same person now who’s only working two days a week, and I can tell you they’re going to be a much more balanced, calmer, happier person in general, right? If you can make the same money in half the time, well, that’s the kind of lifestyle most business owners were aspiring for when they probably got in. And then, of course, you know, we realized the reality of being in business and, you know, have to find our way through that. But, you know, if you can get to a point where the business fundamentally runs without you. And here’s the measure, right? Most people start by taking a month off, they go traveling or something and say, well, I’ve got to just test the business and see how it goes. If you could take three months off, I mean, my goodness, company that can run for three months without you.
[00:07:17] Simon Bedard: Like you, you’re getting into the freedom zone. At the risk of sounding a bit corny here, but, you know, that’s that’s what it’s about, right? Like enjoying the journey. And it just so happens that by building a business that makes it far more enjoyable for you to run, it is also the thing that makes it far more attractive to investors. And so the investors can see that there is less dependency on you, there is less risk. And hey, the lower the risk, not only are you likely to get a higher value, the terms and conditions that get attached to that money become far more favorable. I’ll give you a really great example. We’re managing about 12 different transactions at the moment. Really diverse, different kinds of companies. And on one hand, I’ve got an electrical contracting business. It does over 100 million in revenue. It’s very profitable. But the owners put in a CEO about 3 to 4 years ago. The guy has done a great job. The business has been growing. He’s doing good things, but the owners haven’t been in the day to day operations at all for the last year and a half, two years. And literally the running joke is that they walk through the place, say hi to everybody, and then go to lunch and a wonderful life be when we’ve sold the company, the buyers don’t require them to hang around like we’ve done the deal.
[00:08:32] Simon Bedard: The deal is mostly cash up front. There’s no earnouts, there’s no harsh conditions. They’re literally going to do a little bit of a handover for a month or so, probably have a nice big celebratory party and then say goodbye, take their money and leave. Now, that’s the dream for most business owners who want to sell. So conversely, I’ve got another client a bit smaller, but the guy’s super entrenched in his business. It’s professional services, and the buyer that we’ve got is saying, when I buy your company, I expect you to work for me for the next three years. Three years. We’re trying to negotiate that down. And look, there’s a good chance we might get it down to two years. But two years? Oh my God. Working for somebody else. When you you know, when you’re used to working for yourself, you went into business probably because you didn’t want to work for other people. And now you’re being told that not only, you know, not going to get all your money up front, you have to work for somebody else for a couple of years to get the rest of your money. Like, oh, man. Like that’s one of those little moments that I think can be quite devastating for people. And it’s all because they didn’t use the available runway to structure their business in a way to minimize that risk and get themselves out of that situation.
[00:09:44] Nicole Goodman: Finally, Simon, if a business owner is listening and has no intention of selling anytime soon, what’s the strongest reason they should still think about exit readiness?
[00:09:54] Simon Bedard: My philosophy on all this stuff is none of us are born to do business. Business is just a human construct, right? We’re born to live our life. And the most important question, every single business owner who’s listening to this can ask themselves is, what kind of life do I want? And when you can articulate that clearly, your business then simply becomes a vehicle to deliver you the life you want. And I think if you get clear on some of that stuff first, that actually makes everything else a lot easier. You also then start to recognize that your business, while you may love it, you may be passionate about it, you may want it to go on and live forever. At the end of the day, it is still an asset and it’s an asset within your portfolio of assets, probably like the investment home that you might have down the road or whatever else. And that asset needs to be treated like an asset and looked at with objectivity. So recognize that you’re going to exit one day whether you like it or not, and get clear on what your personal goals are, who the people are in your life that you care about who are impacted by this journey? Decide what’s important and then start thinking about how to get your business to drive your personal goals.
[00:11:09] Host – Grace Jennings-Edquist: That was Simon Bedard, managing director of Exit Advisory Group and author of Exit Like an Expert.
Why great leadership isn’t about having all the answers, but creating teams that adapt
Now to why great leadership isn’t about having all the answers, but creating teams that adapt. With change happening faster than ever, leaders can’t be expected to have all the answers. Leadership specialist Errol Amerasekera, director of Bluestone Edge and author of ‘From Fear to Flow: The Adaptive Safety Revolution’, says the real skill is creating teams that can think, adapt and solve problems together. He explains how leaders can let go of being the expert and build the confidence and capability of the people around them. I started by asking Errol about his background in science, organizational change, and conflict facilitation. I wanted to hear, how did that combination shape his view that adaptability matters more than pure expertise.
[00:12:00] Errol Amerasekera: I think if I just speak a little bit personally, it’s like my own professional journey. I started off as a as a sports chiropractor after studying science and then got into psychology and organizational development. And now I’m a coach and consultant. So I kind of like my own sense of adapting. My own professional relationship with myself has been the underpinning of all that. And then if I overlay what’s happening in our business environment today, as most of your listeners will agree, more than ever, business is moving faster than ever. And the demand to change, to update, to evolve is huge. I read a bit of research a little while ago that said they interviewed, um, leaders of Australian small to medium sized businesses, and three out of four leaders said their business has changed more in the last, I think four years than the previous two decades combined.
[00:12:56] Host – Grace Jennings-Edquist: Wow.
[00:12:57] Errol Amerasekera: So the rate of change for leaders. It’s enormous. So it’s a huge like pressure and stress on leaders to like adapt and grow and evolve just to keep up. So the, the old school, like three year strategic planning cycles, they’re obsolete in six months these days. So what do we do? It’s totally changed in the last five, ten years. If that’s like AI or digital or customer expectations. It’s regulatory frameworks change. There’s never been more pressure on leaders than there is now.
[00:13:29] Host – Grace Jennings-Edquist: So when we’re talking about adaptation or an adaptive team, what does an adaptive team actually kind of look like day to day compared to a team that’s just well managed? How do you tell the difference?
[00:13:40] Errol Amerasekera: So it starts with, I believe, how the leader sees their role. Do you see your role as just to like get the outcome that’s important obviously, or do you see your role as developing your team around you? So then depending on how you answer that question, you go from being the smartest one, the experienced one, the one who has all the answers to the one who can hold the system steady until the system can find its own wisdom. Now that takes a bit longer. And that’s very counter-intuitive. When time is of the essence and business moves so fast. But if we had the discipline to like, go, no, I’m going to hold the system steady, ask the right questions, uh, support, curiosity, support, challenging conversations, support and exploration of ideas. Then over time, the team develops its own intelligence, its own wisdom, and then longer term, that creates capability. And then we capability, we can adapt faster. So rather than the leader pushing the team to adapt, the team develops a natural hunger as a collective to adapt how they think and how they work together. Because how that is challenging each other, having innovative ideas that are welcomed. Where mistakes are seen as learning experiences, that becomes part of our culture. But I get for leaders, that’s such a challenging thing to do when there’s so much pressure and deadlines to get stuff done fast. But the longer term approach around scaling a business, developing a team requires the leader to help the team to find their own wisdom.
[00:15:30] Host – Grace Jennings-Edquist: So how do you actually coach a leader to develop that mindset? Because in the past, you know, traditionally a lot of leaders got promoted, perhaps because they had all the answers. And now it’s kind of like they have to let go of just that identity and be able to coach their team to be adaptive. So how do they, you know, let go of that identity without feeling like they’re losing authority, I suppose.
[00:15:49] Errol Amerasekera: I think, Grace, you half answered your own question. The key is an identity shift. And that’s in business. And it’s how do we see our role differently? Then I would say, what are the psychological anchors that are holding in place the old identity. So back to that fried or fly thing. If under fried or flight under pressure, I’m someone who goes in and controls the team more and doesn’t give him the space to think and space to explore and space to be curious. Then my job as a coach is a coach. That leader around, well, that tendency to come in control. Where does that come from? And that could be your past role with how we grew up. Could be a whole bunch of different things, formative experiences. So how do we unlearn those patterns? And then like reinstall new software around new programs, if you like, how to approach that moment when the pressure comes on. So you think, yep, I know my tendency is to like, go in control. Okay, Ariel, breathe. Notice the pressure coming up and I get a bit anxious. Breathe through that. How do I coach myself through that process? So basically, it’s a it’s a lot of self-awareness, if you like. That is critical in that moment. And that’s where I think, uh, if we break professional development down, there’s a skill based piece that’s really important and a technical development leaders need around skills and technology and frameworks. It’s also, uh, a psychological self-awareness piece that’s equally important in my view. And both those bits of development for leaders are equally important. And maybe I would say my bias coming through in this day and age, that more personal piece is perhaps even more important because at that stage, you think most leaders are technically competent.
[00:17:44] Host – Grace Jennings-Edquist: I have one more question. My last question for you, Errol, is about sticking with, you know, coaching leaders, I suppose, in this time where we need to become more adaptive. What’s a specific phrase or move a leader can use in the moment where they genuinely don’t know the answer, to tell their team about something, what can they do that signals confidence rather than panic to the team if they don’t know the answer?
[00:18:06] Errol Amerasekera: So if they don’t know the answer, the team at that moment might not know the answer either. So there’ll be an anxiety about the not knowing. So it’s a two step process. Grace. The first step is to normalize the anxiety. So the leader might say something like, hey team, what we’re doing is really new today. It’s a new challenge we’re confronting. So it’s normal to feel a bit stressed or anxious about that. And that right away. Oh, so it’s normal to feel that. Yeah, great. It’s normal to feel a bit stressed or anxious. That will bring the team’s temperature down and get them less out of fight or flight and more into that prefrontal cortex, part of their brain. So that’s the first step. The second step then is for the leader to go, okay, I’m a bit stuck. Who’s got an idea? Yeah. So saying you’re a bit stuck or you don’t know as a vulnerability to that. So it normalizes vulnerability in a professional sense. It normalizes not knowing. It makes not knowing. Okay. And that counter-intuitively, perhaps creates the openness for people to try like new ideas without feeling they’re going to get shamed or belittled or put down for a radical idea. And then how do we the third step and how do we welcome those new ideas? Yep. That’s a great thought. Wow, Grace. I hadn’t thought about that. Let’s explore that idea of grace. And then to like, as you move towards some sort of conclusion, double check that everyone’s been included. Fred didn’t hear from you. What do you think about this? Michelle didn’t hear from you. What do you think about this? So we’re actively eliciting the quieter voices. We’re actively bringing those people more in the fringe into the conversation. Then we are maximizing the team’s intelligence because even those quieter people have great ideas and great experiences and leveraging that by bringing them actively. We’re not leveraging the team’s optimal experience.
[00:20:11] Host – Grace Jennings-Edquist: That was Errol Amerasekera, leadership specialist director of Bluestone Edge and author of ‘From Fear to Flow’. Thanks for joining us for this week’s episode. Follow Business Essentials Podcast across social media and head to www.BusinessEssentialsPodcast.au for more. Business Essentials is a SoundCartel podcast. Producers are Nick Schildberger, Nicole Goodman and myself. Technical production is by Pete Letts. I’m Grace Jennings-Edquist thanks for listening. We’ll bring you more business essentials next week.
