How to Build a Business That's Actually Ready to Sell | Joined by Bryce Hamilton

You know, let's move into the business side.

There's this tax shock reality, right? That, you know, most founders think about their exit valuation, but when they actually see the capital gains tax bill, it feels like this took a punch in the gut, you know, sort of like missing your putt on 18, I guess.

Yeah.

And, you know, in your experience, what is the biggest misconception owners have with their net proceeds before they start their tax planning?

I would say, you know, and first of all, I think in some situations, the punch to the gut sometimes can land a little lower.

So I think, you know, in terms of whose perception it is.

But in terms of the planning, let me preface this before I get into the tax planning.

I think the first thing is just finding really good counsel on what the exit process is.

You know, having worked with, I don't even know how many business owners right now, Uh, but you know, hundreds.

in whether they did exit or decided not to just for a myriad of reasons i think finding the proper counsel to build that exit plan meaning and this is before we get to the tax pieces you know like somebody in your in your own personal situation is finding a good agent or rep who who knows how to sell the business getting a good valuation and being able to take you to market and making sure that it works within your situation And I know that a lot of people, they have a number in their head.

They think their business is worth 4 million or 8 million or 10 million, whatever that number is.

Some of it could be accurate based on, you know, real data and market conditions.

Some of it could just be because of a, you know, look, you and I are both business owners and we have our own biases on what we think we're worth and our companies are worth.

But I think what what someone else does and being able to lay out the steps is really, really important.

Now, when it gets to the tax planning, I think most people don't know that they have options.

And what I mean by that is there's things that you could do beforehand in exiting, meaning if your kids are a succession plan, which at one point was a very common strategy or tactic, and it's not as much anymore.

But I'll say is whatever that exit is, does it mean you're going to exit over the course of five years? You're going to sell it over the course of two years? I think being able to establish that is really important because I will tell you this, and I know you could back me up on this, is when you have a business owner that says, I'm ready to sell now, the reality is they're probably a year too late.

And the reason I say that is when they get ready to sell, or I should say when the buyer is buying the company from them, it's very rare that that original owner isn't involved in the transition, meaning there's some form of phase out.

You know, they're the ones who's responsible for the clients, the integrity of the company, the brand, all that sort of stuff.

That's what the buyer is buying.

So most cases, they're going to be involved in the business for the next two, sometimes five years after the sale.

So what I would say is if people think, hey, I'll be ready to sell in two to three years, the reality is you're ready to sell now.

Because when that doesn't happen and you do get to that two to three years, you're a little bit more drained.

You don't have the energy.

Maybe market conditions have changed.