E105: Christian Haack: Discusses Working Strategies To Achieve Your Ultimate Payday - How2Exit.

[00:00:00] Ron Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Christian Haack and he is a, referred to as the Exit Angel. He's a business development strategy consultant. I'm looking forward to, to learning from you today. Christian, thank you for being on the show. 

[00:00:14] Christian Haack: Yes, Ron, thanks for having me. I'm really glad to be on your show. 

[00:00:19] Ron Skelton: So where are you located right now? You're on the other side of the, big pond we call it. 

[00:00:23] Christian Haack: Yeah, well I'm in Germany actually. I'm working from here, but, my clients are, all over the world, so yeah. Thanks to all the technology . 

[00:00:32] Ron Skelton: So you're in Germany. I'm sitting in a Redwood Forest of Northern California in front of some giant redwood cheese, and we can do this show. That's a sign of modern times, it's really cool. So, let's jump right in. Like, I do this with all the guests. Everybody listens to the show. They know where I'm going next. It's your origin story. How did you get started? I jokingly always ask, you were born and now you ended up on a show about mergers and acquisition. Could you fill out the gap in between? But the goal here is just to kind of share your story and how you, how you got into this space. [00:01:00] 

[00:01:01] Christian Haack: Yeah. So I will skip the school education thing and to get right off, onto, the business. So, I was working, as a consultant for big companies. I consulted, the top 500 companies in Germany as well. Always in the field of process optimization, process excellence and all these things. And, I worked with companies, who were ready to, merge or who were ready to take investments from big investors. And, we just kind of, structured all the organization, all the processes, streamlined them, automated them, to be really a good fit for investors to, plug and profit, to scale by the first day and de-risking all the investments that, that were taking into the business. But, I was working, it was really successful.

[00:01:45] But one day my little daughter showed up and said, daddy, why are you are working so much and, and so hard? And, I think I want to earn money. I want to provide a good life for you and, the whole family. But at that night I realized, yes, I'm [00:02:00] working a lot and providing a lot, but what happens when I'm not working? I will not earn money. What happens when I stop working? So I have nothing I could inherit beside a dad that is always working. And so I said, I need to, create something that will be there for the kids as well. And so I started to, think about building some assets that could be sold.

[00:02:24] Yeah, I wrote a book about it. It's, called, Sell Your Business for More. It's, about to be published this year. And, yeah, I will share my experiences there because, if you see the statistics, so many, businesses are closed for good because the business owner are not able to sell. And so I said I need to help them with all the knowledge I gained over the two decades. I'm in the consulting business right now. And this is how I started to, first create, kind of consulting framework, which I can reuse over and over again. I really put all my knowledge into it and then I developed also a platform to give it access to, to all the business [00:03:00] owners out there.

[00:03:01] Ron Skelton: Well, I wanna commend you for writing a book. I've got a project going right now where we're finishing up one and it's very short. Well, ours is very short. It's just about building rapport and, and doing business deals, how important it is, exercises to, to learn how to build rapport faster and that type of stuff. But, just a sheer amount of work it takes to, to start one, get it all through there, send it through the editors and all that stuff to get it done. That's a lot of work.

[00:03:23] Christian Haack: My book is about how to prepare and position your business. Even if you don't think about selling right now, but you could implement so much things. Avoid the deal breakers when it comes to selling or even investing. So you can build it, from the beginning to become, a really good fit for investors now. 

[00:03:41] Ron Skelton: So in the notes that I have, about the show today mentioned that, escaping the, entrepreneur triangle. What is that and what is it, what is it to escape the entrepreneur triangle?

[00:03:53] Christian Haack: So, for me, the entrepreneur triangle is, it's kind of also a dilemma. You have the money, the effort, and the [00:04:00] time. It's like a triangle with all these, three, edges. And then you can say, if I want to climb up within this triangle to the top, because all the coaches, will help you to become the number one expert in your field to become the number one in revenue, number one in sales whatsoever. So this will be the top of this triangle, but you need to invest time, money, or a lot of effort. And, when you're stuck in the middle of this triangle, you either need to invest more time, but it's limited to 24 hours a day. You need to invest more cash, which is maybe also limited, or you need to more effort.

[00:04:36] And then, this is when people are burning out because they try to reach the top, and, couldn't progress. Or even if they know I couldn't do more, my business can do more, they also burn out because they're working under the possibilities. And this is the triangle, and I have to escape them because at when you are at the top, when you are at the top percent, what's next?

[00:04:59] Ron Skelton: Yeah, [00:05:00] like nothing, right? You gotta.

[00:05:01] Christian Haack: You have always to, to hustle, to stay there. You always have to invest to, to pay more for the ads, to get more clients because maybe your organization grows. You need to make more money, but then you need to invest more money, make more clients. So you always have to hustle. You are not always, that kind of a goal, you reached something. 

[00:05:19] Ron Skelton: It's through the, throughout the business scope of things, right? That happens a lot. If you think about marketing and advertising, for instance, everybody figured out they could get really great returns on investment for Facebook ads a long time ago. You could do $5 a day and just get like a huge return. Then as more and more and more people figured that out, the space for those ads diminishes, Facebook start charging more for 'em. And now it's, it's just not as nearly as profitable or as effective. And the current one of that's going through that cycle, everybody's just figuring out, you could get a lot of traffic and a lot of interest is, TikTok ads, right?

[00:05:53] But I see people just flocking to it right now, and eventually there'll be, not enough space for all of 'em. The bidding will go up and it'll become [00:06:00] less effective and they'll be on to the next one. So that's that same triangle. As you go out there, you work hard, you find something that really works, and then eventually it phase, and you have to find, it's repetitive. You have to run through the cycle and figure out what's working now. Right. 

[00:06:13] Christian Haack: And to escape this triangle, I always say the success at the top is not owned. It's rented. Because you always have to work for it. There are so many things out in the field disrupting the market. Again, as you said, they all figured it out. This kind of secret, and then you have to find something new. And, this always endangered the, financial freedom that you, build. And what I help the people with is through an ultimate payday, at the end to really monetize what you achieved so far. You will turn the triangle upside down and then the outcome is unlimited.

[00:06:50] And so the money that you get out of this exit of this ultimate payday, you can do so much more things. Once money is not an issue anymore, you will have an [00:07:00] unlimited creativity to, like look at the super rich people like Elon Musk and Jeff Bezos. They're not thinking about how do I get the next, client. They're thinking about going to Mars and, to the universe and so on. You're living in a total different universe. 

[00:07:14] Ron Skelton: Absolutely. So, inside of that same space, if you look at, turning it upside down and growing into, exponential. You're talking about selling the business or, I mean, part of that also could be, along that path. Do you show people how to acquire something to grow it, to scale it and to sell it all as one package or, or is it just focused on the? 

[00:07:38] Christian Haack: So what I do first with my clients is to define where do they want to grow? So 10% more, it's not a growth strategy, it's KPI of the growth. And so I say, to have this mind shift, not to say, what can I do for the business? I ask the people, what can the business do for you? What's your life goal? What do you want to [00:08:00] achieve? Do you want to work until you die? No, probably not. So what's your kind of end goal for you? The life you want to live?

[00:08:09] And then we designed the business to help you achieve that. If you need a business and you need a business exit of a hundred million, you cannot earn this, adding a client, time by time. No. You need to have acquisitions, but acquisitions without this end goal doesn't make any sense because then they are useless. You maybe buy something because it's kind of cheap. And it will not help you create this asset, and it will not help you build your business that it's the one that investors are looking for. So, at this time, when you know how your business should look like, because it, it's this, what investors are looking for. Decisions are even easier because you say, this will help me.

[00:08:49] This will not help me. So it's fine for me to just, dump it because I don't need it. I'm sure I don't need it. So you, get more clarity, you get more confidence to do the right decisions, [00:09:00] and at the end you have the certainty, I will reach my a hundred million exit goal. 

[00:09:05] Ron Skelton: So a hundred million exit goal. That's a fairly big goal for a lot of the, a lot of the mom and pop companies out there. The brick and mortar companies. Software companies seem to get the higher multiples and, and get their, for your markets and your clients, what is the revenue number that you would need to get them to typically, I know it depends on interest industry and multiple and stuff, but what's the revenue range you'd want somebody to be in if they, they're looking to do a hundred million exit?

[00:09:34] Christian Haack: I'm always calculating with the 10 x exit. Because I always try to reach the benchmarks to talk to private equities. I have a lot of people in my network, private equity. For my book, I interviewed a lot of them because I wanted to know why do they buy, and why do they pay more? And this is what my framework is based upon to say, your business shouldn't be a comparable, commodity.

[00:09:56] If you provide and when we are talking about, real [00:10:00] estate, what's the most critical thing buying a real estate? Location. Yeah. And doing the same with businesses, it's leverage. So always make sure we, we talked about ChatGPT. Don't invest in ChatGPT, even if it sounds or seems to be a very good, investment vehicle. Invest in the companies that could leverage ChatGPT, like Microsoft. And the same applies to your business. You can reach maybe a level of 1 million, 2 million of profit or 10 million. But the higher your, your revenue should be to, achieve the a hundred million, the more stress it means to you, the more scary it is to see another, we see back company, in your field that will, maybe disrupt your business model.

[00:10:45] And then all the value that you build over the last 20 years will be gone in one year. So, what I say is focus on a certain threshold. To say, when I reach this, even if I, I'm not eligible to, approach private [00:11:00] equities, I can always team up with other guys in the same area. So doing this roll-ups, there are a lot of courses as well, um teaching you how to do that. But then, you have to de-risk the investment for the, private equity. And if you provide enough leverage, I can explain it later. Then they will be happy to buy and even pay more. And this was the second question in the interviews with the investors, why do they pay more for certain businesses? 

[00:11:27] Ron Skelton: I was involved last year, I guess it was almost, a little longer than that ago. A little over a year ago in a, in a rollup. And coming out of that, towards the end of it and coming out of it, I was interviewing some of the private equity guys. Didn't put 'em on the show, was it? Cuz they didn't wanna be. I was interviewing them because we needed to find out what they wanted. The thing that was interesting to me was cuz we were doing a rollup, it was a marketing agencies and they wanted to see them working well together and fairly well integrated before they acquired, the entire thing. And it might have just been, it was a very limited number. I probably talked to, [00:12:00] probably short of a dozen. 

[00:12:01] Just barely should write 10 to 12. So maybe I got the wrong ones. I hit the wrong thing. But did you see that when you interviewed everybody for your book and stuff? Do they want, if in a rollup situation in the company's been acquiring or merging with other companies, how well into the integration do they need to see it? Like they were telling us two to three years into integration before they would look at buying us, right?

[00:12:23] Christian Haack: Yeah. So if, if you're doing a roll up for growing up, you need to provide, two, three year, consecutive numbers, how you run the business. But what I say, if you are the kind of leading company, and you are acquiring below your company, if you see it as a, picture, it could be also, in a shorter timeframe. But it will help the investor see, and this is very much important for them, your business is structured to implement or integrate acquisitions because they will do the same on an even larger scale.

[00:12:56] And if you are working for yourself, you have a self-developed [00:13:00] software. You have, all the structures, but your business is, is great, but they see it's not, I call it a pluck and profit. I have a business, I want to plug it in. I want to, have the profit without spending so much effort to integrate, to fix some problems and all these things. And the more I know, how the investor is structured, how his company is portfolio is structured, the more I can build my business to be a very good fit for that. So this is one of the first steps, after knowing where you want to grow. I will do a perfect partner profiling, which means I will not approach a hundred investors just pitching my business.

[00:13:35] I don't like, being rejected as well. So, I have, in my, CRM all the reasons why they buy what they are looking for. And then I can position the business I'm consulting, directly in that way, for what they are looking for. And therefore I say, if you know why they buy and why they pay more, you can build what they're looking for. And then, yeah, also shorten the decision making process because they see, [00:14:00] this deal is definitely thought through. They discovered maybe all the, the red flags, all the, the risk, the deal breakers. So it's easier for me to go inside, do maybe, an even shorter due diligence and then decide to buy them.

[00:14:12] Ron Skelton: So I like that you're, in that roll up scenario you gave. Setting your company up to prove to the PE firm that you're capable of both, acquiring and, and integrating companies. Cause that's exactly their model, right? If you're the big guy, if you're the what, like sometimes the model you refer to, we sometimes call it, hub and spoke. You're the hub, you're the center and everything else plugs into you. Some people call it an anchor property. Then the, the private equity buys an anchor and they're plug plugging everything into that anchor property. If you are that and you have a proven track record of acquiring other companies, integrating them in. 

[00:14:48] Then you kind of show the, the PE firm, that you're ready for them as opposed to, if you've never been acquired or never acquired anybody else, and you go into them, they just know they have more work [00:15:00] and have to build a team around that on their end. I like that concept. Do you see that they actually like that or is that something, I mean, the PE firms, that's what they do. They buy one property, then they go out and they buy other stuff, plug it in, grow it, scale it. That's how they achieve the hockey stick growth that they want to achieve. Are they interested in having a team local, like having the company being able to acquire? 

[00:15:22] Christian Haack: Again, that depends. Why they buy? So what I've seen, is for example, a company that acquired a big marketing agency, but not for the profit, not for the clients because they say you are a great marketing company. And you will only work for all the companies that I have in my portfolio. So it's a win-win situation because the marketing company doesn't have to care about, winning new clients because they are provided by the investor itself, and he knows they will only focus on making my companies better.

[00:15:54] And they, they acquired not for the profit, not for anything, but, and then again, to leverage their knowledge to make all the [00:16:00] other portfolio companies better. And this is what I say about the, about leverage. The best, or there are very two or two very important examples. How leverage works or why they decide. If you see Google. Google has a big database, still the best. They acquire products and services, they can scale with their database. 80% of the profit and the revenue Google makes today is by acquired companies. Because they have the database, they acquire other things, they can scale and leverage, and then they make the profit.

[00:16:35] On the, technological side, it's Apple. On average Apple buys a new company every three weeks. And it's not about revenue or something else. They are buying technology. They are buying experts. So if you, you think about acquisitions, and also if you want to sell, not only look on your numbers or whatsoever, then you're comparable, then you commodity. Because they say, you have 10 employees making [00:17:00] 4 million, the other one has eight, eight employees to also does 4 million. So it seems that the other one is better, or more profitable. But, so you have to break through this first view of your business just by viewing the numbers. And then if you provide this leverage, if you can show them what they can achieve with your business or through your business, they are even more interested in, also say, there are maybe some deal breakers, but we can neglect them because we make so much money. With leverage the good things, that we don't care about, they're maybe bad things in your business.

[00:17:35] Ron Skelton: Let's circle back to, you mentioned growth strategies and where do you grow? Is there a process you run the business owners through to determine what's the best area for them to focus on growth? Or at least get started in growth? 

[00:17:46] Christian Haack: Yes, I do. So one of the outcomes of my interview and the, the book is I created this, MaxIt framework. MaxIt stands for Maximum Exit. And I, defined eight key value drivers, four areas [00:18:00] with eight key value drivers, that are important. You will find the deal breakers in these areas and you will find the deal makers in these areas. The good thing about that is normally when you ask, a consulting company, help me, prepare my business to exit.

[00:18:14] They will look at all details of your business. And I say that's definitely not necessary. Because when you know where to grow or what, what to prepare, you can neglect the other things. So I'm not interested in, improving the IT infrastructure. I'm not interested in improving, maybe the logistics because my perfect investor will have all this in place. But what he needs are maybe my experts, what he needs are maybe the technology I already have in place, maybe in different, countries or continents or something like this. So I don't have to look in every detail of my business once I know what the investors is looking for and where, where I should help my business to be better. And this is why I say I don't need five to 10 years to prepare your [00:19:00] business to exit. We can do it in 18 month or, or less. Because we are only focusing on these areas that are good. We will avoid all the deal breakers, that's sure. But then we will focus and, yeah, also show the investor why we are good. 

[00:19:16] Ron Skelton: I'm reading my, in the show notes that you submitted is, so you said that no money deals, no money acquisition deals are stupid. So is that from the buyer side, the seller side, or both? 

[00:19:25] Christian Haack: No, it's from the buyer side. I see so many ads on Facebook. I will teach you to do that, which is actually good, but, it's not the, right target audience. If you have no business experience and you say, you can buy a business, no money down, and then you will have 250 K a year in, in profit. For me, it's unrealistic. Because either you have to put a managing director in that will take down the profit or, or if you do it by yourself or you have no experience in this industry. The 250 K profit will be gone after, after one year or two year. [00:20:00] You are in the business if you're still there.

[00:20:01] So for me, it only makes sense to use these strategies if you know that you use this company to leverage your business or you need it as an asset, to build value in your business. Otherwise, it makes no sense to you. You are buying a job. When I buy a business, normally don't, even if it works, but I don't want to have a business where the business owners agrees to get no money. So if I tell you, I buy your house, but you will get the money within the next 10 years, but I want to live in that right now. I would be maybe thinking about why you, agree to that deal. 

[00:20:37] Ron Skelton: It's interesting as I had, I host, you and I met on one of 'em. I actually host, twice a month, I host a hangout for mergers and acquisitions, acquisition entrepreneurs, advisors in the space and that type of stuff. And I had a one-to-one with somebody after one of those hangouts. He's really new in this space. He's worked for an IT company and he thought, he thought he had a, what I referred to as a no money down deal.[00:21:00] There was kind of a trucking company that had a software component to it in the logistics space.

[00:21:07] Their software company was almost making as much as their logistics, a trucking company, right? So, but they, they built it outta necessity. They didn't see something they like in their industry, so they built something and then, anyway. Problem is this guy had never run a software company. He's in IT, he's never run even on his own software division of the company. So he has no experience there. Even though he is a, he's got the nerd qualities. He knows computers, he knows how to run the servers, but to run software development, that's a totally different game. And then he is never had any experience than the trucking and the world.

[00:21:38] And he said, I think I can get this down with the no money down deal. They have so many assets on the trucking side that are paid off. I can buy the business, leverage those assets to basically take a loan on it and be pretty much zero down out of pocket. I was like, cool. Thought about it for a few minutes. I said, now if somebody called you today and said, you're coming outta the IT field. And I've got a job for you. It [00:22:00] pay this, he was in his take home, would've been about 350 k a year. And I said, I'm gonna pay you 350 K a year, I want you to come over and be the CEO of a trucking company and an IT software company they have inside.

[00:22:12] You get paid $350,000 a year. But if you fail, we're not just gonna fire you, we're gonna fire all, I think they had 118 employees, all 118 employees, 120 employees. Chances are they're gonna get sued and you're gonna lose your house and your car and everything you own. Would you take that job? And he is like, well, if you put it that way, no. I said, if you don't think you'll take the job of running the company, why would you buy it? Because that's exactly what you're putting at risk. If you use any type of, this is a bigger purchase than SBA, but if you use something like SBA or a lot of other loans, they're gonna make you do personal guarantees.

[00:22:44] Christian Haack: Absolutely. Yeah. 

[00:22:45] Ron Skelton: And you're gonna guarantee your house. You're going guarantee that, he had a little lake house that his family, it's in his name, his family left him. You're gonna guarantee every asset that they can put their fingers on, you're gonna guarantee against those loans for that property. Now if, if the assets are really valuable, like all the trucks and the [00:23:00] trucking, the semis and everything else, you may not have to, cuz you have enough assets to cover the loan. But are, you're putting your, your job, the job of 120 and livelihoods of 120 people onto a gamble of something you never rather ever run. Because, his mindset was, I'm just gonna go in there and figure it out.

[00:23:18] So I'm like, well it's, if you buy it zero down, it's yours to mess up. Well that is the beauty of buying a company. It's not yours to figure out and create and grow and scale and figure out if you have product, market fit, it's yours to screw up. So the high probability that you will is more so than you, than you would like to imagine. So unfortunately with that company, he said, well, I'll just hire a general manager. I said, well, in that space he's in a kind of expensive market. I said, in that space, that's gonna be a 200, a GM, general manager, and or a CEO type of person. 180, $200,000 to run that, right?

[00:23:54] Now, you're making, 80, 90, a hundred thousand dollars, [00:24:00] $120,000. I'm bad at public math. What happens when you have a bad down market? Right? Especially in the trucking industry right now, like it's hot and cold with all this, lockdowns and shutdowns and all that. They've had some rough spells, right? So anyway, I get the zero down deals can be risky. I think it's very possible. Like I'm looking for stuff like that too, but it's like, do I have the expertise to run it? So you either need money, you need money down, money to pay for, leadership, pay for executive coaches, and, fill in the gaps, or do you need the experience? What's your take on that? 

[00:24:36] Christian Haack: Yeah. So, you can buy these companies. I really like these no money down, or no money out of, pocket deal structure. But what I don't agree on or like, is that it's, marketed to people, like a product, like a building, a funnel like ClickFunnels or something like this. It is not the responsibility. As you said, it's so high because it's not only you losing your money, [00:25:00] maybe you even on, if you only have 10 employees and they will, lose their, basis to live because the, the company is gone. Maybe they have a house they cannot move to some somewhere else where they find a new job.

[00:25:12] So I think the responsibility is not that easy to pay 50 bucks for a challenge or I don't know what, to, learn how to acquire a company. From my point of view, these guys, the all brilliant minds, I attended some of these courses, should focus on, make it more a high level, education product to, already business owners. If I see people that were in the course saying, I don't even have 50 bucks, available to pay for the monthly tuition or something like this, that makes no sense. How would you run a business? What will you do with the money that you earn there? When I give, the guy who has no, not 50 bucks, in his pocket, 350 a year, you definitely will know what will happen the next year. He will maybe drive a Lamborghini and then the money is gone and the company as well. 

[00:25:57] Ron Skelton: Yeah. I think that they're, I [00:26:00] agree that they're marketing too, too broad of an audience. They need to, they're seasoned entrepreneurs. There's something to be said for having skin in the game, doing the startup, having putting in the long hours, had 'em been figured it out, and having the respect of what that process is, to bypass. Like, I'm 50, right? I just turned 51, 2 weeks ago, three weeks ago, not too long ago. And I'm at the stage right now, do I really wanna build something totally from scratch again? I say that I'm kind of building something. But, when you acquire something, you get to, you get past that, 60, 80 hour work weekend, all that.

[00:26:32] You get to acquire, something's run. But I know what it takes to do the startup. A lot of these guys, they just don't know what it takes to, to do that. And when it comes times in every business, every business, there will be a times some point or another. There's gonna, and where stuff hits the fan. And, if you've never been in a startup environment where you gotta pull a 60 or 80 hour work week, it's an eyeopener for these guys. They require something to look like, what do you mean I can't go to my kids' ball game? Right. 

[00:26:57] Christian Haack: And this is why I am not [00:27:00] that much into the startup area, or startup industry because, if you see, I had a, there is an example. It's just a calculation, but if you see, a company with four owners, startup, after six years, they make, a hundred million exit. 90% of that goes to the VCs, they back them and, the money is gone. So it's 10 million that they will get. Divided by four. It's two and a half million each. 50% goes with the taxes, then 1.25 million is for you net. And then if you say six years, seven hours a, a week, 12 hours a day, it's 47 US dollars per hour. So somebody on, on Upwork or Fiverr or makes more.

[00:27:44] And you dedicated six years and then end up with, 47 dollar, an hour salary. I think this is not worth it. And this is why I say you, if you talk to an exit angel before you acquire all these VCs, you could do a lot better. But, this is why I said, [00:28:00] or doing the startup space, it's not my thing. I want to work with the people who, already build something, get them over this, or get them to the deal that turns their life around, because once you have the money, you can, invest in 10 other businesses. So, you can leverage your knowledge. Your network can help 10 businesses achieve the growth that, that you achieved in the past, but without having the stress of, working in the operations.

[00:28:27] Ron Skelton: So what is your belief in the, like an entrepreneur, he's got his first business just to say it's running well, it's growing good, making enough money. He's got a decent lifestyle and stuff. What opportunities open up to have for that guy to sell that is, should a business owner sell or should they continue to grow and hold and run things? That lifestyle business. 

[00:28:46] Christian Haack: So my recommendation is sell as fast as you can sell. The faster you can sell, it's better. Still trying to get the maximum exit, but don't wait for the next 10 years to come to [00:29:00] say, I have so much deals in the pipeline, that's great. Then it will be a no-brainer for an investor if you say, I have 5 million in the pipeline, so, your investment already, will be reduced by 5 million. So give me 1 million out of that, as an exit. And, then I will have all this stress, all this, nightmare out of my way because then I can say I can invest in maybe five other businesses too, or something like this, without being in a daily business. I can, have them grow.

[00:29:29] I can combine them. So this is why I say I'm not a business runner, then I'm in, in my business. When you are a business owner, you can sell it, but become a business designer, which means as a business owner, you have your business as a product and looking for a buyer, which is an investor. But as a business designer, you are working with businesses to combine them, to leverage them to, find complimentary services, to find maybe competitive companies, putting them together to increase the [00:30:00] market share. Maybe buy a distributor, or a supplier to, yeah, also increase the profit that you're making.

[00:30:06] And so you can design a very great thing, private equity will love because, they see what you are doing, and then they, if they put money in, here's another 500 million. So let's do it on a greater scale. And then we taking it public and we still double our money.

[00:30:22] Ron Skelton: So there's a cascading element of the wealth, right? So if you're a business owner and you can sell and you're running decently. Most businesses that are, say, under a million dollars in EBITDA, profitable, they can sell for 2x, 3x, 4x, software companies can go way above that. That's even for the little bitty guys. So if you look at the little bitty guys, you just earned three years salary, in a single year. Take that, you go out and buy something that's already up running, improve upon it, add your take on it, sell it for three to five x and then at some point you're gonna be at that level where the PEs are interested in you, like your 10 x. That's [00:31:00] when it starts to do that. If you watch the private equity world, they do this on a different scale.

[00:31:06] They're buying companies, at 3, 4, 5 x, 10 x, depending on the, the type of company in the industry and all that. They're growing it exponentially, and then they're selling it to a PE that's playing at the next level up, right? I've interviewed some guys who'd sold, been the CEO of their company. They sold the pe. They're still the, they got retained, so they're still the CEO that, that company, they worked for a year or two. That company sold to another PE firm, right? They retained a piece of the, equity still, like he sold like 80% the first time. So he, he owned 20% in going into the second PE round, and then they grew, acquired a bunch of, of other companies, grew it massively. On the third time they sold that it was a billion dollar exit with a B, right?

[00:31:47] Third or fourth time deep. You can play the same game inside of your own small business. You can buy it or you can grow something, sell it. You can cascade that money [00:32:00] into something. That's what you're referring to, right? Cascading. Not selling it, retiring it, but really retiring out of it, but selling it, buying something else, multiple things, making them work together, and then scaling that and selling it. So it's a, you're become a serial acquisition entrepreneurs, which you're becoming. Is that what you're recommending? 

[00:32:17] Christian Haack: Yeah. Yeah. It's not a serial, entrepreneur because then you're doing business by business. Becoming a portfolio entrepreneur, meaning you're involved in 10 businesses. And it's the same mindset as, venture capital companies have. They invest in 10 startups. They know that eight or even nine will fail, but the one that will make it will cover all the losses they made, with the other investments. And the same maybe can apply to you. If you lose your business, all your money, all your life work, all your assets are gone. But if you are invested in 10 businesses, and even five will, will not make it, which is, unrealistic because they're existing businesses. But still, you have still five businesses left that make you your money. And so you can [00:33:00] de-risk your own retirement or your own life, your own, wealth planning. 

[00:33:04] Ron Skelton: So you're, you're building your own holdingco, right? Your own holding corporation. Cool.

[00:33:08] Christian Haack: And, the other thing is if you own one company, number say, it's, 80% of your wealth is locked in that company. And with this ultimate payday, you are cashing out. You are monetizing what you achieved so far, and then you can reinvest. But then it's, it's more, how do you say that? You can always, access the money. If it's in your business, you cannot say, I need 500,000. I want to buy a new house, a new home. If you say, I want to buy something, maybe you sell the shelf of one of your investments.

[00:33:38] So you can play around. I don't like this business anymore. I will take my, my investment out. I will invest in something new. Maybe there's some, something I want to start from scratch. Maybe I want to take a year off, spend my, holidays on the yacht. Maybe in The Bahamas. I don't know. So you are totally free with your wealth. And this is what I recommend to people. Just kind of cash out, transform the money you all made. [00:34:00] You are making today into money that pays you forever. Because this is what, what you can achieve by, by doing so.

[00:34:07] Ron Skelton: So liquidity, that's what we call it here. We call it liquidity. So basically you making your, turning, an asset that's tied into like a business performance and stuff to, to a liquid asset so that you can, deploy into multiple, other assets and, and investments and stuff. So earlier you mentioned eight essential things, or eight pillars or whatever. So what are the, eight essential elements of a scalable business? What are those eight?

[00:34:31] Christian Haack: I've put it together. I will also, share it on my LinkedIn, but, the eight essentials, I refer back to my, key value driver framework where I say, these are the, the deal breakers and the deal makers. But when people ask me how can I create a sellable business from scratch, or how can I, what should I focus on? I always recommend them these eight essentials. And, number one is having a professional and digital accounting. With a push of a button, you can give the, [00:35:00] investor or your bank, all the KPIs, all the numbers you have inside.

[00:35:04] So they get a, a very, quick view of your financials. This is, I think this is critical. If you want to take investments, if you want to talk to investors, that with the push of a button, they see, this is professional accounting. Everything will be there. So there will be no maybe hidden things in the desk of the owner. So everything is, is monitored and, also tracked in the, in the system. The second thing, uh in our world, data is like oil, what it was years ago. So have a good CRM and the recommendation is have a CRM that is very well known because it's easy to integrate with other companies. Don't build your own one.

[00:35:43] Don't buy cheap one. A small one that maybe helps you on the short term, but on the long term, I don't want to use some names, but, if it's, a big, CRM system that it's easy to integrate into other systems, easy to migrate or whatsoever, this will help you, say, you can have access to my [00:36:00] clients from the first day we are integrated in your business. And don't need to spend a lot of time in into merging all, all the systems. I had a huge, a huge project in a, in a car manufacturer company. We are working only in taskforce mode, to align these two systems, to make it up and running. So this is, this is kind of a nightmare.

[00:36:20] The third essential is, automated and digitized processes because then they are scalable. The more people are involved in that, in the processes. I don't say fire all the, all the people and only, have systems running. No free the time of these people that they can think about other things. But all these, repeating tasks, all these, plannable tasks, all these things should be automated or optimized and digitized. So they are scalable, and, not dependent on any people doing so. The fourth one, you as the business owner, you have to get yourself off the, of the org chart. That means don't be involved in daily processes. You can still [00:37:00] be there and, you can still require that people will ask you. The best thing is that you build automated process decision chains, in software to say, once this decision is done, an automated email will go to these and that people, because then you say, you can replace my name in this chain with the new owner. Or the investor and the chain will still run perfectly as it runs now, even if I'm not in the process anymore. This is crucial because if the investor sees that the business will break down when you are off, out of the business, then he will never buy it if it's so dependent on you.

[00:37:35] The fifth thing is, build several income streams, or revenue streams. That means don't have your own only value chain to say, we are providing this and that at services, at, maybe something recurring, at some things, that can be done without, your own products. What I mean is, doing joint ventures, as I said before, maybe have some, complimentary companies, complimentary services, products that you can also offer to your, [00:38:00] clients. And, the other way around that they have maybe clients that could also buy your products, but build several things that, once the, the main revenue stream is going down because of economy or whatsoever. You can have maybe some other revenue streams that keep your business up and running. The sixth one is, focus on activities and measures that leverage, and have impact on velocity.

[00:38:24] I don't know if you know this name. So these are some key value KPIs, that measure how effective you are doing the sales, how effective you are doing, you are running your business. It's not only the ROI per employee, but also see, how many leads do I put into the business? What's the conversion rate? What's the the average, revenue for a customer, and how long does it takes my team to convert this? And then you can say, whatever I want to do, is this helping improve these numbers. Any system that I will optimize, will this help maybe, lower the time to convert? Will this help [00:39:00] me to put more leads inside?

[00:39:01] Will this help me? So you always have something that you can measure before and after. So you'll see how, successful your, your activity was. And the seventh one, essential is, you should document almost everything. How you do it and why you do it. If you are, creating a new, branch and a new location, document the decision making process. Why you decided to go there? What did you do? What were the steps? What did you do inside? How did you set up this new funnel? How did you do anything? Because if you document it, you can outsource it or you can sell it so uh, somebody else can do it. But if it's all stuck in your business and it's intransparent, how should an investor scale that? How should an investor duplicate that?

[00:39:47] So the better it is documented and automated, the easier it's for the, for the new owner to, scale and, even sell it again to somebody else. And the last one is, you should build [00:40:00] desirable and sellable assets. And in the best case, these are, these assets should also produce cash flow or other, leverage other assets the investor has. It's because business, if you have a business, you want to make money. If you have a bigger business, you want to make, even more money. So, these assets should be there to help you achieve that. And the clearer you communicate the assets that you have and the clearer you communicate, the leverage that they can provide to your business, the easier you will get the investments and the investors talking to you. So these are the, the eight essentials that I recommend all these people that are asking me, what could I do at least to prepare my business to be, acquisition, ready to be, investible and to be sellable, at the end. 

[00:40:49] Ron Skelton: So rattle them off real quick. The eight, just not, not the whole description. Just the title of the-

[00:40:53] Christian Haack: Okay. So it's the professional digital accounting. It's the CRM data. It's the automized and digitized [00:41:00] processes. It's, get yourself off the org chart. Build, several revenue streams, focus on activities, and measures that leverage, the velocity, document everything and be built, desirable and sellable assets. So these are the eight. 

[00:41:14] Ron Skelton: Awesome. Awesome. That sounds like a way to, like any business can focus on those, whether they're wanting to exit or whether they're wanting just to run their day-to-day operation in a more efficient manner. Right? 

[00:41:26] Christian Haack: Yeah. 

[00:41:27] Ron Skelton: So that sounds like, 

[00:41:28] Christian Haack: And even if you, if you're not thinking about selling right now, implement this and this will also help you build a better business.

[00:41:35] Ron Skelton: I love the, whole, KPI thing. What are the things you can track? They say, that that's track can be improved upon, right? Anything measured can be, can be, improved upon. Too many business owners don't know how, how they got theirselves, right? We've interviewed, hundreds of, different business owners and these roll-ups and stuff that I've been involved in, and we're like, well how do you get your customers? Well, networking and this and that. It's like, cool, how many lead, how many networking events did you go to last year?[00:42:00] 

[00:42:00] They start, you see 'em counting in their head. They don't know. So they're visually in their head. You can see them going like, back to, I went to this place, this place, and this place. Said, I know they're gonna fill out the next question, which is cool. Out of those five, five events you went to, how many leads did you put in the CRM system? They don't know. A lot of people just, they just don't track that stuff. And if you don't track it, how do you know it's effective? Right. 

[00:42:21] Christian Haack: But these will also, and they don't track it because it will destroy their story they tell themselves. Oh, I, I'm so, successful. I'm running a successful business. Yeah, but how do you do it?

[00:42:30] Ron Skelton: And it's, if you're running the business, I, I'll give business owners credit. If you're running your business on a day to day basis, you're paying your bills or you're growing. There's nothing to be said for, I just, I don't track that stuff right now, but if you ever get to the point where you wanna sell it, you better be able to tell the story of how it works. Right. And if you can't articulate the story by, in numbers, we attended five, we get most of our business through trade shows and events. We went to five events last year. We got, 13 leads out of those. Out of the 13 leads, six of them were, ended up at appointments.

[00:42:58] We closed for,[00:43:00] the sales cycle took us six months on average from going to the event to close. That should be top of mind for any, especially the sales VP. I can get it sometimes that the CEO doesn't know it. Especially when they're doing innovation and growing and doing other stuff. But when I talk to the sales VP and asked the same question, he should be able to write all that off the top of head.

[00:43:20] Christian Haack: Yeah. And for the investor, so one of the key value drivers is, revenue reliability. Which means, one topic is it has to be, a reliable and repeatable, process so that the, the new owner or investor knows, you are doing four or 4 million with four people. And it's, reliable and repeatable. So I'm putting in 20 people. We are not doing 4 million, we do a 20 million. And this is how, this is why he should see how you achieve that. Is it by, accident, that you said, I got one client with 3 million last year, so I know at 4 million. Or is it a, a repeatable, reliable process that can be done over and over again.

[00:43:59] Ron Skelton: Right. [00:44:00] So inside of that, in fact, if I wanna double my numbers next year, I need to either do like the numbers I just rattle off. You could look at it and go, okay well I either have to go to 10 events next year, or I have to improve my close rate, or, get more leads per event. But you can address, like, you can address that. So I can see, I can see where like, I'm trying to think of how to articulate this actually. I can see where having the numbers and having the KPIs and stuff tells a better story, but what it it also does is you can't remove yourself from that business until you know that stuff. Right. A lot of the reasons these business succeed is cuz the, the CEO is the center of the business and he just has an instinctive knowledge of when he needs to hustle down and get a bunch of stuff done.

[00:44:47] It's not because he's got tracking it, it's not because he got the numbers. He just sees the, he walks out on the production floor, sees everything starting to slow down, and it's like, well, I better go close some stuff. These guys don't look that busy. And it's always been run by intuition. Intuition doesn't sell.[00:45:00] 

[00:45:00] Christian Haack: Yeah. And this is also, for me, the number one reason why business are not sellable or don't get sold is the ego of the owner. Because he, it might, be the case that without him nothing will, work. And so they don't even think about running the business. It's my baby. Yes. I don't want to sell my baby, but it's, if it's my business, I can sell this business. I can buy two others and I can be, double, as good as I'm right now. So, but, there are a lot of mind shifts necessary, to become a serial exit entrepreneur. 

[00:45:35] Ron Skelton: How do you deal with the ego? Like how do you deal with the, CEO or the reluctance to sell, the reluctance to make changes? You refer to it as ego, but it could be a lot of other titles put on it, but basically, the resistance to change.

[00:45:51] Christian Haack: Honestly, I don't want to say I ignore them, but I don't want to have this, discussions. So I would rather help people who say,[00:46:00] yes, I want to sell. Please help me do this. Please help me achieve my uh ultimate payday because, if I have the resources and the knowledge and all these things, which I need to go for my greatness afterwards, I will do everything right now to achieve that. I don't wanna waste time discussing with these people. They will always find a reason why they should not sell.

[00:46:20] But I want to help these people because I know what to do to achieve that and, even faster. So to say that, but usually, when I come into a situation where somebody said, I don't wanna sell. So you wanna work until you die? No, no, no, no, it's not. And, it's also fine for me to only, I can sell, at any time. I say yes, you can sell for a dollar, then you sold it. But I think not what you want to achieve. But then they say, I just only need a million and not 10. And I think this is a definitely wrong mindset. If you have the chance to sell for 10 million and you only need one. Give the 9 million to people who are not that lucky than you to have a business that could be sold for [00:47:00] 10 million.

[00:47:01] So this is what I say, I will give back to, to other people, helping them, either invest or learn how to do it, and then do the same. Maybe I don't need the 9 million for myself, but I can do so many good things. And, if you don't know what to do, just go to a hospital where children are lying in the, I don't know the English word for that palliative, which means, that they are about to die. And then you can see what you can do with the money, spending money there to give them at least, a few nice days. So I, I hate the, sorry, I don't like these people that say I'm fine with only a million. I think this is unfair, for all the other people who are not that lucky to have a business that could be sold.

[00:47:44] Ron Skelton: I get that. And, you should, if you've created a business, chances are you've spent years, if not decades, failing to maximize it is doing a, a disservice to you, doing a disservice to the [00:48:00] business and doing a disservice to all the employees over those years. Right. I would venture to say is if you've got, a business that's in a self war or 10 million and, and you really only need a million dollars for retirement, and look at the people that have been there for 10, 15, 20 years and figure out how to put some of that money back towards them or, do something to where you take care of the people that got you where you are too.

[00:48:24] Right. So, yeah, and it's, I call BS on that, on that sentiment a lot of times. Like that's, a lot of times that conversation comes up cuz they're just not ready to sell. When you actually talk to somebody that's ready to sell and they're, they've made that call like, I'm gonna sell this now. I haven't seen that conversation. Well, all I need is a million dollars. I'm done. Unless they're so ready to exit, like they've got another project. Or like, there's some life-threatening illness in their family and they just need some money to hand over to family. Like they, if I can leave my family a million dollars when I, when I go, that's all I care about at this stage.

[00:48:59] There's [00:49:00] rare, rare cases, but more often than not, that conversation I've had when they come up and say, well, I'm not ready to sell right now. I was like, well, it takes a little while to get ready to sell. Well, my business is making 15 million when I'm ready to sell. I only need two and a half million for, for a retirement. It's not gonna be that hard. The first thing is true, they're not ready to sell right now. The second thing is they'll never take 2.5 million or whatever they think they just need. Because when it comes time to it, they're business owners. They're gonna want to, to do what they did? I think that that conversation comes up in lack of motivation to make the exit. More so than in the honesty of it.

[00:49:38] Christian Haack: Another situation when this discussion comes up is, when you ask them, how can I help you? And, I don't make it for free for sure. If they have to pay for that, then the ego comes in again to say, I've built this business. I can also sell the business. No, you cannot. It's a totally different skill set. Yeah you can sell, 10 million business for a million. Everybody [00:50:00] can do that. But to really prepare this business and learn how to do it, because once you sell your, you know how to sell your business, how to prepare that, you will become an even better business buyer because you know where to look at.

[00:50:12] So, how to do it again and do it again. You don't need to, to make the a hundred million with the sale of the, the first business, but to do it over and over again, as you said, the cascading, effect after that. But when, when it comes to paying a, a coach to help you, at least for the first exit, this is what I'm focusing on, helping people for the first exit. If somebody has a, a third, second, fourth exit, I'm, happy to help. Because then they, they're getting bigger and bigger. But to have, to have this life changing event, this ultimate payday, and then everything will change. You will leave the, the system and you will, get into another thing where you own the system. You will own your life. Now you are owned by your business. And then you will own your life and can do whatever you like. 

[00:50:58] Ron Skelton: Cool. Well, we're heading towards the [00:51:00] top of the hour. If somebody could only remember two or three things from this show today, what would you want them to remember?

[00:51:05] Christian Haack: I want them to remember, think about exiting your business even if you don't want to do it right now, because you can build an even better business that will make life much more easier for yourself. I think this is, this is one of the crucial points to say, I need to open up my mind. I need to, to learn things. 1,630 businesses are closed every day in the US alone. So think about the wealth that is gone. Think about the knowledge, all the employees that were, now jobless, because of your, you and your ego not thinking about selling the business. And if I say, start with that. Learn what it takes. So you'll also become better to, acquire businesses, grow the businesses because you need what to focus on and you don't waste time and money with, maybe, actions or, or services that are not helpful to grow your business as well. 

[00:51:56] Ron Skelton: So how do people contact you? If somebody wants to, to [00:52:00] work with you, Christian, how do they go about doing that?

[00:52:02] Christian Haack: You could go to, christianhaack.com. So this is my personal page, but, the best thing is to connect on LinkedIn. On my LinkedIn profile, just, type in the search bar, the exit angel. And, I tried it many times, so hopefully I will show up at the top. So, people can contact me there. But what I also created is because, I said, not many of these small businesses can, afford to pay, a top level consultant. And I want to democratize this knowledge because almost 600,000 businesses closed per year in the US alone. There need to be affordable help available.

[00:52:35] And I created, an education platform, which is called Deal Buddies. Where I share all my knowledge, where I, interview experts, to share their knowledge. And the, the best thing is of the money that, you pay monthly, it's kind of a flat rate. It's a consulting flat rate. If you submit a question and, within the community, we cannot answer it, we will take the money of all the people that [00:53:00] subscribe to this platform and hire the best consultants in the world to answer this question. See, the only thing you have to pay is your monthly tuition and your monthly fee, and the result will be public. That all community members can learn from it.

[00:53:16] So this will be, a really great platform where we can learn from each other. And if we don't have the knowledge within the platform, we will hire, the best consultants all over the world. And we will also have a lot of, virtual assistant assistance inside. So it will not take you a lot of time to find things. If you have a question, talk to one of these guys and he will help you out find the best answer. It's called Deal Buddies.

[00:53:38] Ron Skelton: So that's gonna be at dealbuddies.com. We'll put the link in the show notes so people can go there. Awesome. So, I want to thank you for being on the show today. Hang out for a few minutes after we're done. You have any finishing thoughts or ideas? 

[00:53:50] Christian Haack: Yes. I hope, I can inspire a lot of, business owners to go for their ultimate payday, and then, live the life that they want.

[00:53:59] Ron Skelton: Awesome. Well, [00:54:00] that's a show. Have a great day. 

[00:54:02] Christian Haack: Thanks a lot, Ron. Have a great day.