John Lamerton’s Exit Planning Secrets: How a False Exit Sets You Up for Success

Fantastic. I thank you having me back. Now, that sounds really intriguing to say that it’s very rare that I’m invited back.

Well, you know, I was just thinking earlier, I was on a call to one of my mates back home in Oz and I thought, I said, I’m having Lamerton back on the show. And he said, yeah, because that’s just naturally everyone gets a nickname and all. So I thought I’d share that with you. In case you weren’t aware, if you’re of in Australia, your nickname would be Lamo.

Yeah, I’m definitely Lamo.I used to have a blog and it was called Lamerton, Lamo’s blog. So, yeah, absolutely. We’ve got some quick story. I’m a Plymouth Argyle fan. We’ve got a New Zealand striker called Ben Wayne. Can you guess what his nickname is?

Well, firstly, commiserations for having to have a New Zealand striker. They’re really good at rugby. I know the Kiwis, I hate them and. But, yeah, apart from that, yeah. Anyway, so what’s his name? It’s Wayno

Wayne. Oh, it’s very original, isn’t it?

Well, everyone, look, if we have a long name, it gets shortened, if we have a short name, it gets lengthened. And normally we add an o to the end of it. Rubbish collectors are Garbos. Your car registration is your rego. Where do you get your petrol from, a servo? We’re only simple creatures, but let’s speaking, keeping things simple. We are here to talk about your latest book, which is called the false exit. And frankly, you’re helping business owners to keep it simple and not make exit planning overly complicated.

I think I’m almost here to convince business owners not to sell their business. And I know that sounds completely bonkers. Why are you listening to this podcast if you wouldn’t want to sell your business? But I’m gonna. I’m just gonna play devil’s advocate. I’m gonna be that little voice in the back of your head that says, but do you really want to sell? Do you really need to sell?

And yeah, I think the false exit for me is something I stumbled across. And it’s kind of a four step process. Everything in here is common sense. And I think I know the conversations we’ve had, Darryl, and I’ve had conversations with lots of other kind of business brokers, people who help facilitate exits, thinking that we’d have massive disagreements and we’d really, really have a major argument today. I’m afraid we’re not, because we agree on most of this stuff.

Well, yeah, I read the book, and I did share this with you, and I said I deliberately read the book looking for arguments, and I’ve gone, oh, good. I could see. And as I’m reading, as I was saying to myself, good, I can see something here. And then you presented the exact same argument I had. You’re basically saying here, you can do.

This, but don’t do this. Because. And the biggest one that came to mind is for me, I have over the years in working with business owners, helping them exit. They go, hey, I’ve built this business up over many years. I’ve got it to a stage where it can run without me and, well, it doesn’t need me.

So I’ll just let the management team get on with it. They’re doing a great job. And I’m off. And I’ll just take my dividend every six months or quarter or however often I want to take. It’s my business.

I’ve built up this asset. I’m off to sit on the beach and drink Pina coladas and live happily ever after. And that was the piece in the book. And I remember thinking, I’ve got him here. And I backed him into a corner.

Exactly. Neutral corners. And what I’ve seen whenever people do that is on a couple of occasions, I’ve seen it. They’ve gone off, they’ve left the business and just left it to the management team to run. And it’s great for a couple of years, the management team are quite happy. The owners are quite happy.

Then after a little while, the management team sort of go, why are we doing all this work? Why are we doing the work? And that owner, who’s been absent for a couple of years now, is just taking all the money. All the relationships are with us.

This business just wouldn’t run without us. And he’s paying us, or she’s paying us, whatever they’re paying us. And. Hang on a sec. This business wouldn’t exist without us.

And I’ve seen more than once, a handful of times, where basically, let’s just say the business has evaporated from under the owner, the equity has disappeared through various ways. I call them right or wrong, but the business equity has evaporated. And I thought I had you on that. But you’ve got a very specific story in the book. And I’ve gone, damn, Andy’s got a good solution for it as well. So why don’t you take us through that?

Yes. It’s a scenario that I think. A lot of business owners want to be in. And I do kind of lay out in the false exit and say, look, if you imagine your organisational chart, when you first start your business, your name is in every position.

And in my previous books, I’ve kind of helped people remove themselves from doing every job. And I said eventually, the dream is if you look@your.org chart, your name is in one position at the very, very. Top shareholder, and that’s it. And as you said, you just get your dividends and then you’ve got CEO, you’ve got COO, you’ve got CMO, you’ve got CTO. Underneath them, you’ve got a layer of management.
Oh, it’s fantastic. And that was my dream back in the day, was that’s my only job, is to cash in my dividend checks. The problem with that, as you alluded there, is, well, the CEO and the CTO suddenly go, well, why are we doing all the work? Why are we taking all the risk running this business? And we’re then siphoning off to the and used the word absent, absent shareholder. And I think this is a term I use in the book where I say it’s about abdication, not delegation. And it’s this idea that you can just walk away from your business, take your hands off it, never touch it again, and it will keep being the golden goose that keeps laying the golden eggs. It’s not going to happen because you. Have to have your hand on that teller, don’t you?

Absolutely. It might be possible with a larger business when you’re above 200 people or so, but at a smaller business where the owners are really the energy source of the business, it looks good in paper. It looks good on paper, looks good when you’ve got your model and your design and your chart mapped out. But in practice, it just doesn’t work, does it?

No. And I’m an investor in, like, FTSE 100 companies, s and P 500 companies. I have no problem just being a shareholder of that company. I do not want to be called when there’s an oil spill in the Gulf and Shell need something sorted out.

No, no, leave that to the management team, absolutely. But, yeah, your small business, that’s a little bit different. And you can’t just let go of that. And that’s why the thing is, when. You create this business, and it is specifically, I’m talking out to business owners who you have created the business, it is your baby.

And this is something I think you probably hear a lot when you’re talking to business. It’s my baby. So therefore, I’m going to think it’s worth three times the price anyone else objectively thinks it’s worth. I’m more attached to it than anything else. But ultimately, you’ve created a little world.

Where everything is exactly the way you want it and it’s your business run your way. The minute you try and let go, that’s where the problem lies. Because if you delegate, well, you have these four steps in place, the four frameworks, then it’s easier for other people. To run your business your way. And where frustrations lie is when you have other people running your business their way.

Absolutely. And it’s about setting expectations and you use the word abdication. I think. I think that that resonates. And, and I first heard that in Gerber’s book, the EMyth was that an inspiration for you, or is that just something you arrived on, your own experiences?

No, absolutely. The EMyth has been instrumental. I had the privilege of seeing Michael Gerber speak probably a decade ago now. And I remember time he delivered. I think a 45 minutes keynote might have been longer. And I remember a good 20 minutes in. The entire audience is giving sideways glances, everyone, like, where is he going with this? He was telling a story about learning to play the trumpet when he was a kid.

And we’re all there going, Gerber’s lost it. He is, you know, he’s just rambling now. This has got nothing to do with business. He hasn’t mentioned the e myth. He hasn’t mentioned the employee mindset technician.

What, what’s going on? And then, like, the bloody masterstroke that he is, like, in the last ten minutes, he’s went, okay, and now I’m going to introduce the EMyth. And this is exactly the same principle I’ve just talked about as being learning to play the trumpet when I was younger. So, yeah, the e myth, huge inspiration. If you read false exit, you read the e myth kind of so much good.

I think I do use a couple of Gerber quotes in there, but I mean, for example, the final framework of the false text is systems. And if you want to learn about systems, you go to the source. So you read Gerber. You read, what have I got on my shelf behind me? Sam Carpenter’s work, the system.

You read SYSTEMology by David Jenyns. These guys go a lot, lot deeper on systems than I do. It won’t be any surprise to any business owner looking to exit that they need to put systems and processes in place. It is a foundation of a false exit. It’s a foundation of any exit.

But yeah, if you want to learn about that, I don’t think we’ll go too deep on that today because I’d imagine you’ve got entire episodes purely devoted to system creation.

We have. And we had Dave Jennings on the show. So I’ll just put a note down to link to his episode in the show notes here, because it was a good episode a little while ago now. And I know he has strong connections with Gerber as well.

And so, yeah, it is a whole episode. Okay. So we talk about abdication and delegation and one of the keys to a false exit or any exit planning or growing or scaling your business so that it can run consistently and without you, the owner, having to work stupid hours a week. We need some sort of structure. So the first structure you started on there is going, well, let’s start an organisational structure and an.org structure for an SME.

Business needs to be fake based on what needs to be done, all of the functions. And you said that rather than who’s doing what because that’s what most people do, is they go, well, I’ve got John doing this and I’ve got David doing this and I’ve got Darryl doing that. And we miss half of that, half of the business. So the first tip is get, get a structure that works. The next piece is figure out how to delegate.

And I think the mistake a lot of business owners make that I see is they go straight to, they just hand over everything. They abdicate and they walk away. And then three months later they get frustrated that things aren’t being done their way. And they come back and they jump up and down and they rant and rave and they go, well, this person’s no good. And they get rid of them.

And if you want to do it properly, I have to do it myself. So they jump in and they, they micromanage and take back. And if they look in the mirror, they never really set the clear expectation around what they want or how they want the task to be performed. But you’ve got, I think you’ve got alluded to. You’ve got four frameworks or you’ve got some models and tools that help the business owner on this path or methodology.

Yeah. So it starts, and I think every time I think about any of the four aspects, you have to start with the. The very top. It starts with vision and values. And this is something that I never.

Thought I would, I never thought was. As important as it is until I wrote this book, because I knew values will be a part of it, but I thought it would be okay. And then you need to impart your values on your team. And the more I dove into this, the more I realised that none of everything comes from the values, because you’ve just, you’ve just said a line that every single business owner has ever said. It’s just easy if I do it myself, why can’t they do it the right way?

What is the right way? The right way is the way you would do it. Why do you do it the way you do it?

What don’t you understand about that John?

Just exactly. Just read my brain. You know, I’ve got systems. They’re all in my head. So vision, values, is the very, very start.

I said just now, it’s your business. Run your way. So what is your vision? Why does your business exist? Why did you create your business then?

What are your values? And I’m not. I’ve really got to go deep on this and say, look, what are the. Values that you actually live and breathe. Not the ones you paint on the.

Wall saying that we’re customer focused and we’re innovative and we’re cutting edge. No, that’s just a load of corporate bollocks. This is about what you actually believe, that if these beliefs cost you money or they became unfashionable or 25 years from now, you would still. What values would you defend to the core? Because, no, no, it’s the principle of it.

That’s what I truly believe. Those are the values you need to impart.

Yeah. Look, I like the way you said, what values would cost you money? Because if they’re going to cost you money, then you really believe in them and you committed to them.

Serious. And the whole corporate bollocks bit. I just work with so many businesses, and you look at their values on the website and you go, okay, so what are your values? And they go, they’re on the website. And I go, great.

What are they? They don’t know. They’re just a whole lot of aspirational words that they feel that they should have there. That is just like everyone else, it’s almost just political correctness for small business. We need to have some values and good customer service and quality, and we’ve got great people.

They’re the expectations, but they don’t have any behaviors or even KPI’s to support those behaviors. And none of their rituals, the things they believe in, deeply support any of those values either. And if they did believe in those values, that would make them exactly the same as any other business out there, which is just numbing to think about.

Yeah. I always like to think that whatever your values are, you know, you’ve got good values. If someone else could have the polar opposite values and they truly believe them, they truly held them to be true. And the two of you could have a spirited debate about your values and agree to disagree.

Yeah. And there’s no absolute one right way to do anything, and there’s very few absolute right ways or anything or rules in this world, unless you’re really coming down to the rules of physics.

No matter what you believe or what I believe, gravity’s there and. But your values, your beliefs, whether you support Plymouth Argyle or Oxford. Yeah. In the football, there’s no absolute right. We’re both right on that one.

Exactly. Although we all know that Plymouth Argyle are the greatest football team of all time. It’s subjectively so.

So I’ve heard. Yeah.

So our second framework then is people, but it’s specifically the right people. And I owe so much to Jim Collins for this. If you haven’t read good to great. Where have you been?

You know, Jim Collins talks about, you know, people being your greatest asset is wrong. The right people. And when I still remember listening to good to great hearing that line, I can tell you exactly where I was. On the southwest coast path, coastal path. And I stopped in my tracks because. It was suddenly I’d been running businesses for nearly 20 years at that point.

And I was, oh, my God, that’s so obvious. I’ve been employing people, and what I needed was the right people, because I just went, oh, there’s a warm body there. Stick them in a chair. I’ll tolerate that behavior. Those values are not aligned with mine.

They don’t share the vision that I’ve. Got for this business, but, well, they’re here, so let’s work with them.

And I like that. The right people doesn’t necessarily mean the right skills, does it? You’re talking about the right people who have got the right attitude, and they’re I like using the language. They’re aligned to your vision and values as opposed to they’re bought into your vision and values if they suggest sales. Job done on them.

Yeah. Because I had to explain this for the books.

I thought, what are the difference between vision and values? How do you identify the right people using vision and values? I thought actually, first and foremost, they’re not going to share your vision. Your vision is, this is where the company is going. This is why the company exists.

This is the dent we are making in the universe, what they should do. The right people. When you explain that vision, and let’s say you’re at an interview hiring someone. And you explain your vision, that person. Their eyes should light up.

Yeah. They should sit up in their chair and get a bit excited. They should offer help regardless of whether. They get the job. That’s when you know the right person, you know, as you said, is aligned with your vision.

That’s a great tip right there. Yeah. Bookmark that sound bite.

Yeah. As opposed to, do I get paid bus fare for coming here today? And how much is the salary and what are the pension contributions? That’s a person who’s looking for a. Kind of, you know, just a paycheck.

Yeah. I reckon if we treat our people like commodities, they’ll treat us like commodities. And a commodity is showing up doing the working my 40 hours, what am I, pension. You know, what do I get out of it? Is the mindset. And once they’ve got everything they can out of you and we’ve treated it like a transaction, then they’ll just naturally go, okay, well, our deal, our time here is finished. I’ll just move on to the next thing and we’ll go.

And it’s very transactional and they’re pretty good businesses like that, but they’re soulless and flourishing SME’s. And I’ll say an SME is anything up to 200 people in the business where the owners still have a lot of physical presence in the organisation, they thrive on that energy, that passion, that vision, that foresight from the founders of the business.

Exactly. Because that is what lights you up. Because the vision is aligned to the values. And again, the values are not something. That you want your team to buy into.

Yeah.

Because the value, your values should be their values. They should be shared values. It’s not. Oh, as a company we’ve got these values. So I have to care about the environment? No, you should care about the environment. You know, I am passionate about, I don’t know, ice cream. Yeah. I’m working for an ice cream company. We’re going to be the best ice cream company in the world. I’m really passionate about ice cream.

You tell me that Ben and Jerry were not passionate about ice cream. Of course they were. But you don’t go there and say. Well, I could take it or leave it. I’ve gone into companies again, food companies.

And I’ve said, oh, what flavour do you recommend? Only for a member of staff to. Go, I don’t particularly like ice cream. Why the hell are you working for an ice cream company? And how the hell is an ice cream company hiring someone who doesn’t like ice cream? The values just aren’t there.

Exactly. Exactly. Okay. So getting the right people is, number two, making sure that these people get your vision and that they’re aligned to your vision and their values.

They haven’t had a sales job done on them. They haven’t bought in. They are naturally aligned. So that’s the second.

Yeah, there is a there is a bonus one there, which, I’m really sorry, but again, it comes from the all blacks. Yeah, sorry. They come up with it. They may have that may have been that they needed to come up with this rule, because it is a rule that they called the no dickheads rule.

Yeah, they borrowed that.

Which, you know, obviously the Aussies wouldn’t need to have that rule, would they? But it’s this idea that regardless of how talented someone is, if they are a bit of a dickhead, if they are disruptive, if they are self centered, if they are selfish, if they don’t really have the customer’s best interests at heart, it doesn’t matter how good a salesperson they are, it doesn’t matter what targets they hit, they are going to be disruptive.

Yeah. And that. Yeah, I’ve read the legacy book. I’ve forgotten the author. But the book is about the New Zealand All Blacks team, and it really talks about their culture and the no dickheads rule, and it really aligns well to business because, you know, business, especially these SME businesses that we’re both talking about here, of all size of SME’s, I think it’s a team sport, and running a business is a team sport. And that no dickheads rule fits right into there.

Yeah, I believe you have that one, John.

Well, again, part of Jim Collins was getting the wrong people off the bus, wasn’t it? And everyone forgets that. Oh, yeah. Get the right people on the bus, the wrong people off the bus, and then the right people in the right seats.

Those wrong people off the bus are those who are not aligned with your values. They don’t share the vision. And the dickheads that need to go. And that could be your best performers.

And it’s a really important thing, because to say, we’ve seen a lot of businesses where they go, well, I can’t let the salesperson go. Yeah, he or she, they don’t fit with our. Our values, but they’re making so many sales, and you go, okay, so do you believe in these values or not? Because everyone else around the organisation is. The gap is getting wider because they’re just so pissed off with. With you not doing anything about it, and it all feels like lip service and rhetoric.

Yeah, there might be a bit of short term, but gain, but every time I’ve seen the owner take it and let that person go or try and change them, and. Or they try and change them, and then they can’t be changed, and then they let them go, everyone else just steps right up really quick, and they fill the void.

Yep, absolutely. We had this with one of our one centers last year. So he had a couple of dickheads that were good performers, and behavior was tolerated over the years.

They weren’t aligned with the values. They kind of bought into the vision for the company, but the values were definitely not shared. And then we created this toxic culture, and eventually this business owner said, look, you and you have got to go. And as you said, the rest of the team suddenly, oh, thank God for that. We wish you’d done that years ago.

And I said, raise their game, because suddenly they can see that all these values you claimed were important, that we knew, you just ignored every time that person hit their sales quota. Suddenly we’ve seen, oh, yeah, you are actually living by your values. This is true, and this is why I say it flows throughout the entire framework.

Absolutely. Okay, so we’ve got the right people on the bus, and now we’ve got them in the right seats.

And I guess we can add. They know how to find their way to the seats, and they always sit in the same seat. So there’s a bit of systems and structure and process there. What’s number three on the list? John?

So number three is your decision making framework. So we’ve got the right people on the bus. We know they share our vision and values. They now need to know, what are. We going to do?

And this is about empowering them to make the decisions. Remember, right back at the start, we said, it’s your business. Run your way. So what is your way? Well, that is enabling the right people to use your values, to lean into that vision.

To answer the question, what would Darryl do? Because that’s the only question they actually. Ever need to answer, is, what would Darryl do?

And this is the one where we’re setting their expectations around what would Darryl, what would John, what would Sarah, whoever the owner is, he’s going, well, this is how I think. Here’s how I would make my decision.

So you’re empowering them and giving them all the tools to fill in the blanks if you weren’t around to make that decision.

Yep, exactly. And this can be, it can be a Bible, it can be a handbook. It can be, there’s a founders wishes document that I refer to in the false exit. It can be a one page cheat sheet.

It can be coaching. But notice again, we bring the values into it often. What would Darryl do? I would do this because this value is important to us. And the minute you make that connection and we say, well, actually, this is a values based decision.

 what, you kind of almost put. Every decision into buckets and you say, this is a financial, logical, mathematical decision. This is a values based decision. This is a technical decision. And this, here’s some technical resources that you can refer to.

This is just, you know, oh, what color should the button be? Oh, look, we’ve got brand guidelines. There they are. Here are the tools you need to make the decision. What would Darryl do? There you go. I’ve dictated it for you in probably. Multiple media, I would say.

Yeah. Okay. So again, we’re giving them all of the tools they need to make decisions within the way that you want decisions to be made. And I imagine that there’s also, for the normal way of doing things, they’ve got procedures, they’ve got policies, they got processes to the right level of detail for the size of business.

Yep, exactly. And I think the example I used in the book, and I’m going to apologise now to any religious listeners out there because I’m going to be a little bit blasphemous now.

So you’re insulted Aussies, now you’re moving on to religious and yeah.

If you’ve made it this far, then you should be okay. Next up is politicians. No. Right. Religion.

So the example I used in the book was the movie Bruce Almighty, Jim Carrey, Morgan Freeman, basically, Jim Carrey gets to be God for a weekend. God decides, you know what? I’ve had enough of all this running the world malarkey. I fancy taking a false exit and having a weekend off. So Jim Carrey, you can take over and the movie starts off.

And obviously there’s some hilarity that takes place as Jim discovers his brand new powers. But ultimately, then the serious stuff starts happening because then Bruce starts getting prayers. People start saying to Bruce, oh, God. What should I do about my problem? What should I do about myself relationship with my ex?

What shall I do about this? Oh, God, please, can you help me find the strength to do this? What? What should I do about this?

And please let Stuart win. No, God, please let Oxford win. God, please. Aussie Wallabies. All blacks. Come on.

I think most of the prayers in the world are probably sporting related. Please don’t let them be awful again this weekend.

Please don’t let the all blacks win again.

So Bruce tries a few things. He creates, you know, every prayer goes on a post it note. He’s, oh, could I remember that one? And then he ends up with post it notes all over the apartment, filing cabinets. And he ends up unable to move because every prayer is in a filing cabinet. He tries email. Brilliant. I’ll just. So he’s typing away day and night, and all of a sudden there’s another 3 million unanswered prayers that are coming. There’s got to be a system for this. There has to be a system we can do that will help people with all these prayers they’ve got. And my brain, as I was watching this and writing the fast exit, thought, well, there is. And God’s figured it out. So what he’s done, first of all. He’s going, oh, my God all these. Oh, my God. That’s where that phrase came from was God going, oh, God, I need a day off. So God said, right, I need a day off.

So Sundays are my day, okay? Day of rest. On the 7th day, he rested. I’ve got all these questions, though. I know what I’ll do. I’ll write a book. I’ll put it in a massive book. There you go. All the questions you’ve got for all those problems that you’ve got. Any question, what should I do about x? You know, what should I do about y? Great. It’s all in the book. Brilliant. And then someone pipes up, I’ve got time to read the book. God, can you just give me the TL, doctor? Give me the headlines. Right, okay. Right. Top ten do’s and don’ts.

Actually, there’s no do’s in there. Top ten don’ts. There you go. Thou shalt not. Oh, brilliant. I’ve got a little listicle. Fantastic. My specific scenario isn’t listed on here. God, what should I do? Oh, no, right, I’ll tell you what, I’ll write another book, we’ll update it with a few more questions. The answers are in there. No, that’s not good enough. I still need help. Right. I’m going to create a network of local branches, and in each of these branches I’m going to put a manager and I’m going to train them up and they are going to know every word of all the books.

They’re going to know these commandments inside out and they will be able to help you. And every Sunday, and indeed throughout the week, you can go and visit your local branch and get the help you need. And I thought, that’s genius. He’s created an entire system of decision making frameworks which leads back to the only question that any religious person, any Christian, needs to answer. What would God do?

Beautiful. I really like that model. It’s an application, it’s one that we’re all familiar with, whether we like it or not, that the framework is, it’s a metaphor that we can understand.

And again, apologies to anyone I have offended there, because honestly, no intent is.

No intent of offense there. And all we’re doing is looking at the framework and going, hey, look, what do we take out of it? Well, let’s start with a Well, here’s the, the rules, the policies, if you like. Here’s the top ten policies. Right? If you need a bit more information, if you’re working on more regularly, here’s a bit more information. And then if that doesn’t help, here’s the next layer of detail that should get you through every question that you’ve got.

And as a framework, we can use it as a framework for taking our business and setting up the guidelines for how our business can be run. And it’s just the right level of detail for the right time. Is that the takeaway we’re looking for, for this?

Yeah, I think so. At the moment, everything you’ve got, your business, your way, is all in your head. So it has to be out, it has to be documented, you need to better refer to it. So again, let’s, let’s use the religious angle there. And let’s say there’s a, there’s a vicar in a parish somewhere and he gets a question that he hasn’t been asked before. Oh, that’s an interesting point. What shall I do? I know. I’ll refer to the Bible. I’ll get the Bible out. I know roughly which book I need to reference. Oh, let me have a look. Oh yeah, God said this. Okay, here’s the answer your question? Let me apply context to the resource I’ve got. He doesn’t need to memorise every word of the Bible, but what he does need to know is know where to be able to reference to find the answer.

You know, very split. What should I do about my cryptocurrency now? God didn’t plan what to do about your cryptocurrency investments, but if you ask your local vicar, he will be able to find you what would God do about this?

There we go. Beautiful. So, decision making, having a decision making framework that empowers our management, our leadership team, to whom we’re delegating to, I guess, crudely put it, think and act like we would. So in other words, think and act and make decisions in a way that we know are going to be aligned to our thinking. And therefore we can’t jump up and down about it because we’ve set the expectations, we’ve given them the framework, the religion, if you like. We’ve given them the framework into how to think and act and operate under this paradigm, which is my paradigm, my set of beliefs, dogma, whatever we want to call it.

There’s number three, our third thing, our third tool. So we’ve got vision and values, we’ve got the right people, we’ve got a decision making framework. And the fourth one is..

The fourth one is the simplest of all. It’s systems for everything. And that’s it. That’s all you need. So just create systems and off we go. What could be easier? It’s not quite as simple as that as they say, it’s simple, but not easy.

So how do you respond when people go, ah, but John, look, we don’t want to systemise everything too much. Our people are creative people, our businesses is very creative. If we systemise them, we stifle their creativity and their thinking.

Yeah, absolutely. And that then goes back to, okay, creativity is one of your values. Brilliant. Let’s systemise creativity. Not to the point of let’s tell you what to create, but let’s say that actually protecting time for our creative people to be creative is important to us. Right? That’s systemised. How are you creative? Are you creative locked away on your own? Is that, do you need to protect your space? Or is collaboration one of the values that’s important to you? In which case we need to arrange entire days when the whole team is together. It’s about creating. And again, reference back to Jim Collins once again, the flywheel. What pushes your flywheel?

What gives your flywheel momentum, because that is what you systemise. And if step one, step two of your flywheel is creativity, then systems are the scaffolding that protect that creativity. They don’t, they don’t force you to be creative in a particular way. They would still act as the scaffolding that allow you to be creative.

And creative is only one part of the project. I still need to deliver the project to the client on time. I still need to do all of the other parameters, logistics, bits and pieces around creating a proposal and delivering and implementing and what have you. All those other bits and pieces can be systems and structured.

The actual creative process is a very small part of the overall project, is what I found. So what a lot of people who have actually implemented systems in that type of environment have said to me, it’s actually allowed our creative process to be more creative and come up with better ideas. Because all the mundane stuff we’ve now got structured, it can just happen a whole lot easier. We’re not starting from scratch every time because we do anything that, that happens more than once. We’ve just got a process for it and automation as much as possible. It actually makes our creative process easier. And why didn’t we think of that earlier?

Yeah. How many creatives actually say they are more creative when given constraints? So given the blank canvas, the blinking cursor, come up with something. Oh my God, there’s the entire plethora of the paradox of choice versus come up with something on this topic. Okay, right. Yeah, I can think of something there and I’m up and running. I’ve got momentum.

Yeah. So John, we’ve got these four frameworks, these tools, what do you call them? Are they four things? I think frameworks, frameworks that we have to do.

They are scaffolding on which you could, and the phrase I kind of use with the false exit is you can nip out from your business. And dependent on how much of these frameworks you put into place, will probably dictate how long you can nip out for. If you want to take a long weekend, you don’t need very many. You probably need some of the right people who can answer most of the questions of what would you do if you want to take three weeks out of the business? That’s a little bit different, but not as bad as three months out of the business. And what if you wanted to take a twelve month sabbatical? Well, if you need to take a twelve month sabbatical, you probably need the majority of this in place before you do.

So the one thing that’s still an open loop in my mind, and maybe for the listeners as well, to pull it all together. You touched on the shareholder role, and we explored the shareholder role earlier on in our conversation and how that is different in a SME to a corporate and a FTSE 100.

So our business owners have diligently listened to our conversation and gone, yep, vision and values, get that sorted. Getting the right people in the right seats. Yep. I know what I need to do there. Or decision making framework. Yeah, they’ve got some good tips there on making that happen and systems and for everything. What will that give me if I’m the owner of the business? What will that enable me to do if I’ve nipped out for three months, six months, twelve months, how do I stop me becoming the absent owner of the business and the business running away from me, to put it gently?

Well, I think first and foremost I would look at again, let’s talk into the listeners here who maybe are planning to exit their business. Why are you exiting your business? Why are you looking to exit? Because most of the owners I speak to that are looking to exit are. Either burnt out, so putting this in place will reduce burnout. They’ve fallen out of love with their business. Well, this a business created around your values and a vision you truly live and breathe. You shouldn’t fall out of love with that business, particularly if you’re working with the right people and they’re taking most of the day to day dirge off your plate. You shouldn’t fall out of love with your business. Maybe you’re not physically able to do the work of your business anymore. Well, great. Let’s find some of the right people who can let’s enable them using systems and processes and a decision making framework to do that work. Let’s remove that problem. What does that leave kind of the financial point of view? Well, I’ve built up this business. It’s worth quite a bit of money. I could cash in my golden goose. And I think if you run the numbers on this, and again, I’m not an accountant, not a financial advisor, but just think about the numbers and this is from my own point of view. I nearly, very nearly sold my business eight years ago now for 2 million pounds. Lovely. That would have been really, really nice. It was a five times multiple. So great. I get five times my annual profit. There’s some tax to pay on that, there’s some broker fees to pay on that. So let’s say I end up with four times revenue. I end up 1.6 million. Happy days. I’ve still done very, very well.

I know, though, I’ve killed the golden goose, so I no longer have that income coming in. I now need to turn my 1.6 million into 400,000 a year just to replace what I had. So I need a new investment that yields a 25% return that is safe and secure and I know everything about it.

The only thing I know that provides me with that is the business I’ve just sold.

Yep

So why don’t I keep it in the first place and earn five times I own the asset? And then that was another light bulb moment for me, is actually, I shouldn’t be selling businesses, I should be buying businesses.

Yeah. And so what you call the false exit, we call succession. Get out of the operations of the business and just get involved as the shareholder. I call that the chairman role. Get involved as a chairman role, act like a bigger business, but adapt that role for a smaller business. So, a chairman in a smaller business, you probably want to be meeting with your management team regularly. You absolutely need some sort of reporting and monitoring system in place, so you can keep your fingers on the pulse of the business and you can ensure that your budgets, your plans, your forecasts are operating as they should, and you can pick up any deviations and work with the leadership team to remedy that as soon as possible.

So, in the shareholder role or the chairman role, combining those two words together, in that role, you can take the 30,000 foot view or the overhead view, and you become a little detached from the business, from it operationally. But you can definitely look at it strategically and look at the things that the business needs to be doing that will be adding value to the revenue in the next 6,12,18 months time, which is kind of the outcome of the book, isn’t it? You’ve got to figure out where you add value and how you add value to the future of the business so that you don’t become that absent shareholder or owner of the business.

Exactly. The case I made again at the end of the book was, well, let’s imagine you’ve sold your business, sailed off into the sunset, you enjoying your pinacoladas on the beach. What do you do on week three or month seven? Well, you probably start another business because you’re bored and you’ve got that drive and ambition to do something. You don’t want to sit and retire. And there are studies, I again referenced them in the book, Shell, the oil company. They did a study of early retirees at 55 versus retirees. At 65, the guys who took early retirement died earlier than those who worked an extra ten years. That lack of purpose, that lack of having a vision and creating a values aligned business led to early mortality. So a false exit is about nipping out, recovering, relaxing, not hating your business, not being burnt out by your business, but not being tied to it either. So that you can go away. Take three weeks in the sun, take three months to write a book, go volunteer in South Africa, whatever you want to do. Coming back, just absolutely fired up, ready to drive that vision again. And maybe you are going to create a new vision. I’m not apologising at all.

Again, Jim Collins. Read Jim Collins, please. The BHAG that he talks about, big hairy ass, go. That is your vision. So where are you taking your business this year?

So imagine going in full of beans. And able to give your best to the company, whatever that is. Perhaps for you, that could b you’re really good at selling on stage, you’re really good at thinking strategically.

Maybe you’re really good with the numbers. Perhaps you’re actually just a really good people person. Or as. Let’s bring it full circle, as Michael Gerber said, you are a really good technician. Great. Lean into that if that’s what you enjoy. If you enjoy being the technician, but hate running the business, let’s create the business framework. And that requires a little bit of businessy work so that you can be. The technician that you always wanted to be.

Yeah, that’s a that’s a great way to wrap things up closing the loop. We’ve gone on much longer than we normally do on this podcast, so it’s a bit longer than average. But John, I’m still going to ask you the question, because it has been a longer episode.

If there were just one. I know you gave us a framework of four, but is there one key message that you really want business owners to message to take away from our conversation around the false exit?

I think just again, I would like to be that little voice on the. Shoulder just saying a false exit is possible and it is an option for many people listening to this, it won’t be the option that you want to go with. You’ve decided, yeah, I do want to have an employee owned trust. I do want a management buyer, actually. I do just want to sell the business. I do want to cash in, but I just want to be that devil’s advocate that just says, do you though?

What if we could fix the problems that underlie the reason you want to sell this business? Could a false exit be that that second option that you consider.

Excellent. Keep it as an option, be aware of your options, and then make a decision fully informed. John Lamerton, Lamo, thanks for joining me on the Exit Insights podcast and sharing your thoughts with us again today.

Absolute pleasure.

About John Lamerton