How to Build a Significant, Sellable Business with Scott Snider

In this episode of Sales Against the Odds, host Lee Brumbaugh sits down with Scott Snider, President of the Exit Planning Institute (EPI), to discuss the Four C’s: Human Capital, Customer Capital, Structural Capital, and Social Capital, and their role in driving business value. Scott explains how decentralizing ownership and focusing on value creation, rather than just income generation, can help businesses scale and prepare for a successful exit.

Scott shares how Certified Exit Planning Advisors (CEPAs) guide business owners through the process of closing the “value gap” and making strategic improvements, such as building strong leadership teams, implementing scalable sales processes, and fostering a culture that aligns with long-term goals. He emphasizes the importance of involving key employees and advisors to ensure sustained growth and value creation.

Key takeaways:

  • Decentralizing ownership helps drive long-term business growth and value
  • Focusing on the Four C’s: Human, Customer, Structural, and Social Capital
  • Certified Exit Planning Advisors (CEPAs) help close the “value gap” and guide strategic business improvements

This has been generated by AI and optimized by a human.

 

[00:00:00] Scott Snider: For the owners listening, the theme around all Four C’s is owner decentralization.  Let’s put you in the seat that you love. Let’s put you in the seat that you’re good at, and then let’s hire great people and build great systems to do everything else.

[00:00:29] Lee Brumbaugh: Welcome everyone to another episode Sales Against the Odds. My name is Lee Brumbaugh, CEO of Sales Xceleration. Very excited to have Scott Snider on with us today. Scott is the president of EPI, the Exit Planning Institute. He worked on creating the value acceleration methodology where you take a strategic framework, you help business owners simply increase the value of their companies while preparing to successfully exit.

[00:00:55] Lee Brumbaugh: I’ve known Scott amazing what they’ve done at EPI. The CEPA community, as they called, has grown to thousands across the globe. So very excited to have Scott with us here today. Thanks for joining us, Scott.

[00:01:05] Scott Snider: Thanks for having me, man. Excited.

[00:01:07] Lee Brumbaugh: Yeah, so Scott, let’s jump in. when you think about it, you know, we’ve had these conversations before.

[00:01:13] Lee Brumbaugh: One of the, there’ll be a lot of s and b owners that join us. That’s typically our audience. And one of the things we talk about today is when you think about the, biggest disconnect. So you’ve got a certified exit plan, you’ve got a seat that’s working with the business owners.

[00:01:25] Lee Brumbaugh: Where do they find that biggest exit when you start to work with business owners or that biggest area that you can make an impact, that

[00:01:32] Lee Brumbaugh: disconnect.

[00:01:33] Scott Snider: for many owners, uh, I think one of the biggest impacts is this, the simple change of mindset. But it’s not as simple because I think for many of us as business owners, we’ve kind of grown up with a way that we do business, right? Like, I could tell you that, when I started hanging out with my dad who created the value acceleration methodology, I’ve always had this kind of income generation mindset versus income and value and the relationship of it.

[00:02:01] Scott Snider: And then I’ve also had this like, how do I create an extremely successful company, one with profitable revenue, great people, great culture, strong customers. And that made me a successful company year over year. And I think the biggest mindset shift then and the biggest challenge kind of right out of the gate for me.

[00:02:21] Scott Snider: Is how do I move from successful year over year to long -term significance? Which is, for us at EPI, we would define a significant company that’s one that’s highly valuable, ready, and attractive. But that’s also aligned to the business owner’s business, personal, and financial goals. And so I think that’s the biggest area that people start to think about exit planning and they think about, I gotta exit my business.

[00:02:46] Scott Snider: They kind of forget about the personal and financial planning. I think that’s the biggest area that people start to think about exit planning. And they have built a company maybe over 20 years focused on success and not necessarily significance, and there’s a difference. And so that’s probably the first, you know, kind of hurdle or thought when we start interacting with owners, is their just existing mindset.

[00:03:04] Scott Snider: It’s good, it’s probably created a lot of success, but that success doesn’t necessarily translate to value.

[00:03:10] Lee Brumbaugh: looking at the methodology and one of the areas that talks about, I wanna make sure I have it right, was kinda that structural kind of capital area. we’re thinking sales, right? And so many times. that sales process isn’t documented how do you make them realize that it’s more than just kind of cash flow and it’s ebitda, it’s seeing the bigger picture of having processes in place where the business can exist without them.

[00:03:32] Lee Brumbaugh: how do you make that

[00:03:33] Lee Brumbaugh: shift?

[00:03:34] Scott Snider: Spot on. You guys, I would say, operate in customer capital and structural capital. And so again, you guys participate in the year -over -year success for the company, you actually participate in the long -term significance as well, the value side. And so you’re spot on. I would say when we’re talking about revenue generation, sales, customers, most companies in America, like 94 percent of them, are under $5 million in value.

[00:03:58] Scott Snider: So we’re either saying, look, that’s just my business and that’s how we’re operating. Or they’re saying, look, I want to become, enter this lower middle market, and I want to go $5 million plus, so how do I scale it? So whether we’re operating in that company or trying to scale it to north of $5 million, what we typically find, in terms of structural capital, Because I always kind of smile when I’m hanging out with my owners that are our friends.

[00:04:21] Scott Snider: And they go, man, I’m, Scott, we’re crushing this year. I’m our best salesperson. And I laugh, kind of like that, and I say, all due respect, might be totally right. But that makes you a successful company, not a long -term significant one. what I mean by that is that we should always be trying to decentralize ourselves.

[00:04:38] Scott Snider: and replicate ourselves. And through Structural Capital, we’re able to build systems, structure, playbooks, buyer personas that allow us to teach others and empower them to actually be a better or the best salesperson in our company so that we’re generating revenue whether I’m in the office or not. I struggled with this myself in my landscaping business that was a micro -market company less than 5 million in value and I was in fact our only salesperson. if you think about it in terms of value, well, who’s going to buy that? Because when they buy that and I finish my transition period, well, who the hell is doing sales?

[00:05:14] Scott Snider: No, there’s, we have to train someone and then there’s all that. So,

[00:05:17] Scott Snider: or I could look at the same landscaping company who has the structural capital and go, man, that’s actually going to, sell for a higher multiple because I don’t need Scott to make that happen.

[00:05:27] Scott Snider: He’s got a, he’s got at least another sales guy that knows what’s going to do, what’s going to happen. And then I can replicate that person. Because we have the training modules, we have the playbook, we have the data that we want to track, we have the system, the process, all that structural capital. So, that’s what we’re kind of always kind of looking at it from a buyer’s perspective, not just from our perspective internally.

[00:05:49] Lee Brumbaugh: Yeah, it’s interesting ’cause I was before with Sales Xceleration was on kind of the private equity side and so many times you’re looking at, so much of it is in the, numbers, right? When you’re looking at acquisition of a company and those types of things. But it is so much more, it’s the replication, not only from a.

[00:06:05] Lee Brumbaugh: Having your ducks from remote financed, but from an operational perspective, from a sales perspective, and if the founder is tied into all of those areas, it is so problematic as, as you allude to, so one of the areas that strikes me is, is you’re looking this right? So if we’re looking at a company, it’s a $5 million company.

[00:06:22] Lee Brumbaugh: The owner’s like, all right, I’m gonna get my $20 million check out of it. They get into it, they’ve got adjusted a EBITDA of let’s say 2 million, and that multiplier comes in at a four. And they’re just, whether they’re tightening up sales process or strategy, it’s not there. Right. how do your CEPAs help from kind of a value creation standpoint?

[00:06:39] Lee Brumbaugh: How deep do you get in there? What do you find is typically missed? And, and I guess when it comes to value curation, do you find owners can pivot and look differently? I would love to just hear your thoughts on kind of value

[00:06:49] Lee Brumbaugh: curation.

[00:06:50] Scott Snider: so the short answer for any owner listening is like, Absolutely. I don’t care if you own a $2 million company or a $20 million company or a $50 or a $100 or you’re just starting out. We have to begin the, where I’m trying to shift a whole mindset is back to this value creator mindset. So we, it is there and there’s tools to help you get there.

[00:07:13] Scott Snider: Now, when we talk about, what we are referring to is we would call this the value gap. And how do we start to close that value gap? So let’s talk about a little bit of a clarity moment around who SEPAs are. I find that, particularly for the business owner, sometimes it can be a little confusing because SEPAs are different types of advisors.

[00:07:33] Scott Snider: So I want you to think about SEPA as like a feather in your cap. It’s an additional thing that you are. It’s not necessarily who you are. What I mean by that is, there’s going to be a bunch of advisors in our journey, that surround us. And they’re going to surround us in three ways. From the business perspective, from a personal perspective, and from a personal financial perspective.

[00:07:55] Scott Snider: So therefore, you likely are to have an attorney, a CEPA, a financial advisor, wealth manager, a consultant, a general business consulting that’s helping business improvements. and you might even have like a performance coach or a personal planner help you kind of figure out life a little bit, right? then you’re going to have functional advisors that come in and out of the equation to address different needs inside of, inside of your business.

[00:08:20] Scott Snider: So all of those folks can and are certified exit planning advisors. So the certified exit planning advisor role, when you see that as a business owner after their name, it tells you maybe three or four things. One, those folks understand how value is driven in your business and how your goals are aligned from a business, personal, and financial perspective.

[00:08:42] Scott Snider: they lead with value in mind. They’re value centric. And that they’re relationship builders. So they don’t want to be a transaction. They really want to build a relationship with you as the owner. And also, given that they’re relationship oriented – it tells you that they’re masterful at connecting and collaborating with people.

[00:09:00] Scott Snider: So when I see that I actually, the business has a diagnostic done, and we’re identifying a sales strategy problem, they go, hey, I might be your wealth manager, so I don’t do anything on the business. I’m your personal financial advisor. But I’m going to go call Lee because I’m going to bring in Lee because he’s a specialist inside of this functional area that, that has need.

[00:09:20] Scott Snider: And

[00:09:28] Scott Snider: so the way that we’re addressing that value gap is by identifying first what it is. So you talked about structural capital. we’re going to look at the four intangible capitals, structural being one of them, and identify the blind spots in our business. That’s going to then match to a multiplier inside of our industry.

[00:09:38] Scott Snider: Could be 2 times, could be 20 times. Typically it’s between like 5 and maybe 15, give or take. And we’re going to show you how you line up. And so to your point, you discussed a scenario where I want it to be worth $20 million but it’s only worth $5. Well that would mean I have a $15 million value gap. And the question becomes How do I get there?

[00:10:00] Scott Snider: And you get there by actively measuring and managing the four intangible capitals. And that will take your multiplier up.

[00:10:07] Lee Brumbaugh: good explanation on the CEPA before you jump into that too. I love your analysis of that because we, again, we have SX advisors that also wear the CEPA cap. Right? And, it’s a great way to be able to model some of these areas and still help as you get into the weeds for whether it’s sales or finance.

[00:10:22] Lee Brumbaugh: So, good explanation

[00:10:22] Lee Brumbaugh: on that,

[00:10:23] Scott Snider: your folks are like, I believe like the ideal example. Because the way you guys are showing up is that, we do sales strategy, we can pump in some profitable revenue, help bring structural capital to the game and give you a more successful company, right?

[00:10:37] Scott Snider: Like we’re going to get some wins right out of the gate. We’re going to drive revenue up. We’re going to drive profits up. But if that advisor has CEPA after their name too, this person knows that not only are you going to drive revenue up and profitability up, but they’re actually going to talk to me about how that affects the value of my company.

[00:10:55] Scott Snider: And they’re likely going to have a little bit of a conversation with me around the holistic view of what that means from a business, personal and financial standpoint. They’re not going to do the personal planning. They’re not going to do the financial planning, the estate planning. But I also know that they’re a part of a global community of advisors.

[00:11:11] Scott Snider: your sales guy could go, your sales consultant can go, You know what, I actually know a really great performance coach. We need to help you kind of figure out what you want to do after you exit this thing. So let me bring in a personal planner. And so, you become actually a pretty valuable resource.

[00:11:27] Scott Snider: And I think owners of the future, people in their 50s, 40s, 30s, even in their 20s, they look for their advisors of any kind to be relationship drivers. They don’t want you to just transaction. I’m bringing the sales consultant to help drive sales and that person is going to leave. I want you to, like, bring some value to them.

[00:11:44] Scott Snider: you guys actually are a perfect example because I think most owners also think that professional advisors are their CEPA and their attorney. And when we start to change the mindset into value creation, if trained well, they can show up talking to you about that whole equation and then bring in the right people along the way.

[00:12:05] Scott Snider: So you’re actually driving more value to them than just revenue growth. You’re driving relationships, and think about that. If you have an owner that is totally confused on what to do and lacks identity outside of their business. but their sales consultant helped them change that mindset through a professional that they brought in they’re totally going to keep you guys around in the relationship because you’re more than just a revenue driver like did this guy freaking change my life or This guy just saved me a boatload of taxes because he got me with this estate planning attorney and I got an awesome trust now.

[00:12:37] Scott Snider: Like, who was that introduction? Well, that was the sales consultant that I brought in. They’re like, sales consultant? How the hell did he know an estate planning attorney? He’s like, well, they’re trained in this collaborative way where they’re supposed to be doing this through the connection of people.

[00:12:50] Scott Snider: So to me, it’s a new way of trying to do business, but I think it matches the mentality of the next generations of owners that we’re going to be working with.

[00:12:58] Lee Brumbaugh: obviously EPI does this well in, sales Xceleration. That’s our secret sauce is that referral, that ecosystem. Right. And we at sales Xceleration wanna be on the forefront because if, like you said, if we can make the introductions that help you create more value in your company Yes.

[00:13:12] Lee Brumbaugh: From a sales perspective. But how do you understand from a finance perspective when you need HR brought in, and then how do you see the big picture of where your company’s sitting? Those things make it a true partnership. Those are the people that drive value. It’s not just tactical, but it’s tactical to the whole side of the business.

[00:13:27] Lee Brumbaugh: The days of just consulting and giving you, you know, 50 pieces of paper of here’s how you need to fix your sales are done. It’s what do you need to do to fix it? Now, what is your strategy for the next year? But how does that strategy tie into how you eventually exit the company? When we do that, well. We drive so much more value than what we do in in a transactional

[00:13:45] Lee Brumbaugh: type environment.

[00:13:46] Scott Snider: think about your team, right? Like, your Sales Xceleration consultants out in the field, when they’re matched up against your competitor, they can drive that kind of value, or just, just honestly bestow that kind of knowledge.

[00:14:00] Scott Snider: Like, it really opens up the owner’s mind to say, Oh, like, I get it now.

[00:14:04] Scott Snider: And you guys were the catalyst for that. Take your competition out of the way because the owner goes, man, and then that owner goes, he’s hitting some golf balls or doing whatever they do. And they go, dude, I just brought in a sales consultant. So the sales plan looks great. But dude, I hooked up with this estate planning attorney.

[00:14:20] Scott Snider: I’m saving a boatload of taxes. You got to call this guy. This is wild. You know, so it’s like, oh, cool. I’m doing what I’m supposed to do inside of the sales strategy side, but I’m also adding value here. And I think you’re spot on. There’s like maybe a couple hot topics straight out of the gate for the exit planning community and in the professional advisory space, particularly those core advisors like a CEPA.

[00:14:39] Scott Snider: But I would assume in your world too, obviously AI is all around us. And so frankly, what I think you’re going to see many smaller company owners do is they’re going to try to DIY it, right? They’re going to try to figure it out themselves by typing it into Google and they have that cool AI tool.

[00:14:53] Scott Snider: So it’s like, Oh, this is how I change my sales strategy. Got it. I’m going to try that. And so if you’re just walking in to be transactional, you’re out. I just don’t think that’s what people are looking for anymore. because they don’t need to, because that’s just right at their fingertips. The way we combat that is to drive value to the conversation and actually to the owner, from a business, personal, or financial aspect.

[00:15:12] Scott Snider: That’s why they have you come around and stick around.

[00:15:15] Lee Brumbaugh: Most companies don’t have the bandwidth to build a high functioning sales department to allow them to meet the revenue targets with Sales Xceleration they don’t have to. Our experienced fractional sales leaders consult and implement your sales strategy, infrastructure management, and team development.

[00:15:32] Lee Brumbaugh: Discover how we deploy these proven sales solutions to address your sales challenges. By going to our website, filling out the contact form, we’d love to hear from you.

[00:15:44] Lee Brumbaugh: we do a lot with productivity partners, right? So Scott, when you think about it, like it’s lead generation, it’s management coaching, like how do we use ai? And I’ve had a lot of guests have come on the podcast, have talked about AI is more about solving the business problem first, not just inserting tools.

[00:15:59] Lee Brumbaugh: And so what we’re really focused on right now, we have a new tool that we’ve rolled out looking at from a value creation towards ai. How do you analyze where the gaps are in your company? Where do you really need AI to fit in? And then we’ve got, a service side of that says, all right, we’ll implement the tools based on what your business needs, and then we’re gonna support that.

[00:16:16] Lee Brumbaugh: ’cause so many times they get three to four tools. And then three to four tools sit on the shelf and they don’t get the pull through into the organization. And again, it just goes back to our whole conversation as being holistic on what the business need is the biggest approach. Whether what you’re doing, whether we’re doing so.

[00:16:32] Lee Brumbaugh: Makes a ton of sense. So one of the other things that, has been top of mind that I think about it, where are you seeing, you know, for the companies that are doing well, right, they’re getting the higher multipliers. they had the company here, cipa, and thank you again for the explanation on the details of cipa, where are you seeing the biggest bang for the buck of this company is doing it right?

[00:16:54] Lee Brumbaugh: Because a CIPA guided me. how are you seeing companies really drive up that multiple or what if I’m a, if I’m a business owner today, I’m thinking, I, I just got told my multiplier’s a four, I get to a six. What do you think the tangible things you’re seeing happen? Yeah.

[00:17:07] Scott Snider:

[00:17:07] Scott Snider: you, uh, certainly teed it up, right? So structural capital is a part of these four C’s. So when the short answer is, if you’re getting a higher multiple against all your other competitors, it’s probably because that company has a strong four C’s. It’s where 80 percent of a company’s value lies.

[00:17:23] Scott Snider: And so when I talk about the four C’s are, Human capital, so your people. Customer capital, your customers. Structural capital, all the process, how to, the optimization system, all that kind of stuff. And then you have social capital, which is your culture.

[00:17:38] Scott Snider: And I would say that for the owners listening, the theme around all four C’s is owner decentralization.

[00:17:46] Scott Snider: Let’s put you in the seat that you love. Let’s put you in the seat that you’re good at. And then let’s hire great people and build great systems to do everything else. then that allows it to be scalable. So, think about it as well as a, just a good contingency plan, particularly for our owners that might own micromarket companies that are listening.

[00:18:07] Scott Snider: Like my, my landscaping company, if I died when I had my landscaping company, my landscaping company would have literally went out of business. Because no one knew what the hell to do, right? they took orders from me. the strategy was my strategy, the vision was my vision, the marketing was my marketing, and the sales were my sales.

[00:18:25] Scott Snider: No one could do it. And in that owner -operator style business, particularly one that you’re out there on your feet and using your hands, if I got in a tragic accident and lost one of my legs, that business probably would have went out of business. So it’s also, I think, just an active great strategy to have to always be decentralizing yourself.

[00:18:46] Scott Snider: But going back to the 4 C’s. So when you think about, human capital, why the companies are getting higher multiples is because some of the buyers coming in and analyzing something like human capital and saying, How gritty are these people? Are they, are they really helping drive vision and strategy?

[00:19:05] Scott Snider: What’s their mentality? what kind of culture do they live in? what is their knowledge, how long have they been there, how are they rating the company in an employee satisfaction way, right? Better the score, stronger the score, stronger the company. Then combine that with, let’s call it the second 4C, structural capital, which we kind of talked about, right?

[00:19:26] Scott Snider: Do they have repeatable, scalable process set? When you say, hey, I have a sales playbook, can you quite literally pull it up, can you print it off, And can you share it with me? And then, oh, by the way, when was the last time it was updated? So we’re looking at those kind of things. Then you’re going to look at…

[00:19:44] Scott Snider: Customer capital. This goes into the funny story of I’m our best sales person. Well, that can’t be if you want a highly valuable company. You have to have somebody better at sales than you. And you have to have your, your buyer personas identified. But you also have to have long -term customers.

[00:20:01] Scott Snider: Are these just kind of in and out kind of customers? Are they repeat buyers? Do we have long -term agreements with them? Are those agreements transferable? Is it profitable revenue or is it, you know, are we just. I have this client lingering around because he was my dad’s buddy, like, you know, 20 years ago, and he’s still around.

[00:20:18] Scott Snider: And then lastly, you have social capital, which is your culture. So we would describe culture in maybe four ways. One, what’s the mentality of your people? So do they have a, north star that they’re all marching towards? A guiding light, core values, trust accelerators, things of that nature. Two, Is vision.

[00:20:37] Scott Snider: Are they bought into the vision? Are they helping create the vision? Short -term and long -term strategy. you’re looking at a performance bucket. I think it all kind of leads to, can we hit our numbers? Can we forecast and can we hit it? and then last but not least is a rhythm. What’s your communication, right?

[00:20:53] Scott Snider: Do you just walk into the, into the shop floor, or onto the landscape crew, or into the office, and people just sit at their desk and just, go? Or are you bringing people together? Is there a heartbeat? And so, the stronger all of those are together, the higher the multiple. And if all four of them are strong, you’re going to look at what’s called outlier multiples.

[00:21:11] Scott Snider: You might look at an industry that’s anywhere between five and ten, you might look at an industry that’s anywhere between five and ten. But there’s some guys getting 13 or 14. If you’re looking at 13 or 14, it’s because all four of those C’s are super strong. And the kicker is that the owner is planned personally and financially.

[00:21:28] Scott Snider: Because what the buyer doesn’t want is for me to get cold feet right at the end. Or for me to be like lingering around the office. They’re like, dude, you’re a minority owner right now, like, and you don’t have an operational role, like, we don’t need you here, you know, so typically what we find is that the business could be strong, but the owner was ill prepared for the next phase and is tinkering around back in their business or right at the last minute goes, you know what, I didn’t like that guy.

[00:21:57] Scott Snider: I don’t like this guy. I’m not selling this thing. And so, that’s the kicker. So the outlier multiples are going to companies and people that do those types of things.

[00:22:06] Lee Brumbaugh: Good explanation. It’s very pleading to think about in those four C areas, and they all make sense. You know, you mentioned kind that human and social as you’re talking, I was kind of connecting those two and we mentioned so much of this podcast already. It’s decentralization of the owner, right? So let’s say you’re, you’re that $5 million company.

[00:22:23] Lee Brumbaugh: You’ve really done a nice job. If you’ve developed kind of a small leadership team, there’s four to five kind of key personnel that are driving, as you call it, the human capital and the social capital element. what do companies do? Well, because I’m trying to buy the company, right?

[00:22:36] Lee Brumbaugh: And I’m thinking about this company and how do I know? Of those four people on that leadership team, they’re gonna want to stick around. how do owners do a good job of tying that together to make sure those key employees are driving human capital and social capital? Continue to, one, stick around and two, be just as

[00:22:50] Lee Brumbaugh: motivated.

[00:22:51] Scott Snider: two sides. The first way I’d answer that is, going back to social capital culture, are your employees, that key executive team, contributing to long -term vision, long -term strategy, short -term strategy, and this is always the kicker, I get a lot of crap for this one, Lee, are they tied to the P &L?

[00:23:10] Scott Snider: Most owners don’t want to share their P &L because they go, oh man, I don’t want

[00:23:13] Scott Snider: people thinking how much I make. I’m saying share it. But don’t just share it, educate them in it. so we get in this debate in my community about not sharing that level of detail. And I go, of course, I wouldn’t just like put it up on the screen and say, Oh, look at this, I make 25 or 30 percent or 10%, whatever it might be.

[00:23:30] Scott Snider: No, you got to educate them on how the business works. And so anyways, there’s that side. So if I’m saying, well, these people are sticking around, they’re not loyal to me, they’re loyal to the brand, they’re loyal to the, to the company, they’re loyal to the customer. These people love this company. They’re, in fact, creating the vision.

[00:23:46] Scott Snider: It’s not even my vision anymore. So there’s that. But then you can actually kind of lock them in. So, what we have even at EPI for some of our key executives, you can do something like phantom stock. So they get a 1 percent of the company at point of sale. or you give them half of it at point of sale.

[00:24:04] Scott Snider: Half of them, One year out after post sale. I think the buyers like that too because they have some skin in the game and they don’t have to ask them, they’re already in it. So I think a lot of, for the larger companies, you’re looking at private equity groups are saying, look, we might want to tie them up for two years.

[00:24:21] Scott Snider: so we want to put these like, you know, these sale agreements or these, uh, like these stay bonuses in. what if the seller goes, oh, I already have that? The buyer’s going to be like, oh, really? I gave a point to my key executive.

[00:24:33] Scott Snider: my key executive, well, one, they’ve earned it, right?

[00:24:35] Scott Snider: There’s no way that my company would be worth outlier multiples without the people that are helping do it, right? It’s not me that’s just the value creator. It’s we, the whole company, thinks like owners. And as such, we gifted them a percent. They’re going to get half of that 1 percent at point of sale, that’s a gift from me to them, they’ve earned it.

[00:24:58] Scott Snider: And then when they stick around for the two years that they want to, in a good transition period, they’re going to get the other percent from us, from the proceeds of ours. We’re going to hold some, call it escrow money, that it’s due to them after their two years of service, if they’re in good standing.

[00:25:14] Scott Snider: And then you the buyer can cut whatever deal the buyer might be like, shoot, I’ll match that 1 percent and I’ll have my own thing with them. The big thing when I start thinking about, when I get asked, Lee, about the value creator employees, like, there’s no doubt that the business owner is going to participate in the biggest chunk of value at point of sale.

[00:25:33] Scott Snider: And they’re going to participate in the net profits of the company, because if we’re doing value creation, the company’s growing, as well as our value’s growing, so the company just becomes more profitable. And the owner’s participating in most of that. What you could also do is tie people into incentives based on profitability.

[00:25:50] Scott Snider: just like an owner would take a distribution at the end of the year, the employee’s taking a cut as well, based on performance. There some stuff that you could do to tie them in today, and then, and then you could say these people are really bought in, they’re definitely gonna stick around.

[00:26:04] Scott Snider: I mean, hell, they, they can’t earn half of their 1 percent if they leave. And they’re gonna want that. And then I would also say to the buyer, not only do we have that stuff in place, but I don’t even drive strategy anymore, they do. So this is really their company without it being their company. And then you have to show the proof, right?

[00:26:23] Scott Snider: You can’t just say that, you gotta show it. And so, for me, that’s how you get your employees tied in. I’d like to think whenever me and my father, who’s also my business partner, go to exit our own business, That the 52 people here that work at EPI, I’d like to think that they like me, Lee, right?

[00:26:41] Scott Snider: So I think they go, yeah, Scott’s a good dude. But like whether Scott’s here or not, man, this is my home. This is where I want to create my career. As long as the buyer doesn’t mess it up, I guess.

[00:26:51] Scott Snider: that’s what I want, right? So that’s probably another podcast for another day.

[00:26:55] Lee Brumbaugh: when you buy a company, there’s risk, and when you have, like you said, culture alignment, social alignment, key employees that are bought in and you can just, you can feel it, then that eliminates so much more of the risk. And they’re also then created about the strategy session, which.

[00:27:07] Lee Brumbaugh: The strategy areas, which is why a lot of people, you’re especially in the strategic side, you’re buying the company. I had a past client, as you were saying this, and, and we worked through, actually, I was just talking even this morning, but he had a temperature you know, he had that adjusted, the had the EBITDA goal and we put, you know, just old school we’re like in with pencil or whatever, it’s like getting the top.

[00:27:25] Lee Brumbaugh: But then we hit there, all the employees would hit these areas but it also drove not only for the value of the company, but also in the short term. it drove what we were doing day to day, our customer response time, how we interacted, even our front lines employees were trying to find new business.

[00:27:37] Lee Brumbaugh: I mean, those are the things that you can do creatively. They get buy-in and it’s not rocket science, but people get skeptical or hesitant because, well now I get release numbers. If you don’t, you don’t have

[00:27:47] Lee Brumbaugh: transparency.

[00:27:48] Scott Snider: Lee, this is like a hot topic too. is the next generation of workforce, employees. And I’m just telling you, if you just do a quick Google search and look at what Millennials and Gen Xers are, right? So people between 28 years old and the Millennial generation going all the way through Gen Xers who are turning 60 years old at the top end now.

[00:28:09] Scott Snider: They just think differently than their baby boomer counterparts. Not different bad, just different. It just is. And if you do any Google search, And I’m just telling you, if you just do a quick Google search and look at what So people between 28 years old and the Millennial generation going all the way through Gen Xers You’ll find that both of those generations, and then Gen Z, the younger folks coming up after them, they naturally seek purpose in what they do.

[00:28:26] Scott Snider: They don’t want to just show up 9 to 5 and make the bolt. They want to know why they’re making it. Like, hey, that goes on trucks that ship food across our country. Or that creates something that goes on a ship that serves in our military. Or they, create professional education to empower advisors to go have deeper relationships with the owners.

[00:28:46] Scott Snider: People look for that in their jobs now, it’s just, a key leading force of value creator employees.

[00:28:55] Lee Brumbaugh: I totally agree with you. They have to feel like they are part of not only the vision, the solution. They’ll be talking to you three months about what’s the next step in their career when they just start. But that’s okay because again, if you’re giving a runway to here’s where we’re going, here’s how you can be a part of it, they do their job and they execute, then it all falls in line.

[00:29:11] Scott Snider: and so they also love transparency, and that’s what the tie back to the P &L that you were mentioning If you educate them, now if you do also the similar Google search, I’m sure there’s some owners looking like I wonder if Scott’s full of it or not. So they’re sitting their computers now and they’re looking on their phone.

[00:29:26] Scott Snider: Google something around like what the typical American employee thinks the owner makes. And it’s astronomical. I think it’s seriously like a non -value credit employee thinks that an owner’s taking away like 45 to 50 percent net profit. And we all know that that’s for the most part not the case.

[00:29:43] Scott Snider: I’m not teaching that we should share the P &L just straight out of the gate. A value creation company educates on how a business is run and educates on the P &L and how everybody has a line item within it. We’re all managing this thing together. And I think with that kind of education, Unlocks, or empowers people to start to think like owners.

[00:30:07] Scott Snider: Because for the owners listening, that’s what we look at that stuff. Probably every day I’m looking at my P &L. Making sure that the business is moving, right? And so, why not take some time to educate? And if you’re bringing your people together. So we bring our people at EPI together for one hour every Monday.

[00:30:23] Scott Snider: And there’s a 20 minute segment of that one hour company -wide meeting that’s education. And so take the 20 minutes, educate them on P &L. And say, look, we’re going to take four of these over the next four weeks, a month. We’re going to teach you about the different areas of the P &L and why it matters and how they run.

[00:30:40] Scott Snider: and then we’re going to introduce the company P &L to you and you’ll see how much we all make. And maybe for the larger companies, they’ll have a deeper appreciation for the taxes the business owner makes. So like, I might take home 30%, but I’m really taking home half of that after I pay my good share of taxes.

[00:30:57] Scott Snider: Across the board. And so it’s not as much as you might think, though it might be a good chunk. and frankly, rightfully so, I take the most risk in the company. I think people value creator people, people here, my, my folks at EPI they might say, cool, like, yeah, Scott seems to live a nice life, but dude takes a bunch of risk, he’s a servant leader, he takes care of us.

[00:31:20] Scott Snider: I don’t look at 52 people out there, Lee. I look at 52 families. Families that rely on me and our company together to make this thing happen. And so, yeah, I might take home the biggest paycheck, but perhaps rightfully so. And maybe for our younger folks, I think some of the folks here, they won’t spend a career here at EPI.

[00:31:38] Scott Snider: They’ll leave and go start their own company or go buy one. And hopefully they leave better here, uh, because of it. So, obviously passionate about teaching P &L, for sure, no doubt.

[00:31:48] Lee Brumbaugh: yeah. And as a leader, that’s what we want to see, right? If we’re, if we truly care about our people and like you said, a family, then we’re developing people. And that’s what we always wanna be doing. And I love people that have worked with me in the past, and now they’re doing bigger things and better things that I even imagined.

[00:32:00] Scott Snider: It’s like one of the reasons we start and build companies. I think I’m going to go out on my own. I really appreciate the opportunity here. Like I’m going to go start a one. This is actually a true story. I’m going to go start a coffee house.

[00:32:12] Scott Snider: Like, so I’m passionate about coffee and I want to go, I’m going to go do that. I thought it was cool.

[00:32:17] Scott Snider: if you need some investors, like, I might be into that.

[00:32:19] Scott Snider: Because I also know how you think already, right? So if you got that kind of grit of an entrepreneur, I might get in on that. So, it’s kind of cool.

[00:32:28] Lee Brumbaugh: Well, Scott, this has been great. I think the key things that, and it aligns so much of what we’ve been talking about, which is again. Building that strategic ecosystem, making sure you’ve had a culture that diversifies risk and really focus on how you grow the business. I mean, that’s what we’re trying to do in this podcast.

[00:32:43] Lee Brumbaugh: I think you’ve given so many nuggets that we can take away from this today.

[00:32:46] Scott Snider: Thank you. I appreciate the opportunity, man.

[00:32:49] Lee Brumbaugh: Well, thank you everybody for joining. This has been a good, another episode of Sales Against The Odds. Join us in two weeks. We will have another thought leader that creatively like Scott has done today, challenges us about how we think about growing our business. Thanks everyone.

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Episode Highlights

(00:00) Introduction


(01:33) The mindset shift: success vs. significance


(03:34) Why structural capital drives long-term value


(06:50) Understanding the value gap


(07:33) What is a Certified Exit Planning Advisor (CEPA)?


(09:21) How CEPAs close the value gap using the 4 capitals


(10:23) How sales consultants drive both revenue and value


(17:07) The 4 C’s: what earns outlier multiples


(22:51) Tying key employees to the business through culture and equity


(27:48) The next-gen workforce and the need for purpose


(29:43) Educating employees on the P&L to think like owners

About the Guest

Scott Snider
Scott Snider
President of the Exit Planning Institute (EPI)

About the Host

Lee Brumbaugh
Host of Sales Against the Odds

Sales Against the Odds: A Podcast for Sales Growth

Are your sales not growing fast enough? Tune into Sales Against the Odds for candid conversations and proven strategies from leaders who’ve beaten the odds in sales.

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