Why teamwork matters in exit planning with Julie Keyes

Julie Keyes didn’t set out to become an exit planning guru, she learned from her own experiences exiting a business and her work with the Exit Planning Institute. She now shares those takeaways—including the importance of hiring the right team, understanding your true valuation, and more—at KeyeStrategies, her exit-planning firm. Julie and Morgan chat about why preparation is key and how to find the right people to support you as you succession plan.

Learn more about Julie:

https://keyestrategies.com/

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Transcript

SPEAKER_02 0:04

Welcome back to the Morgan on Purpose podcast. And we're starting out strong with one of everybody's favorite topics, which is existential dread. And I'm kind of kidding, right? Because mostly we're talking about exit planning. But exit planning and existentialism have something in common. There's an end to all of this, and whether it's business or life. And you should put a plan in place to make the most of it. Not only the journey, but the transition to something different. And I, so me, I'm on a mission to make sure that business owners don't die at their desks, right? Chained to work that they don't even want to be doing anymore, frankly. In fact, I'm so passionate about that that that's the title of my upcoming book, Don't Die at Your Desk. So to make sure you don't die at your desk, you need an exit plan. And that brings me to our guest, the go-to expert for anyone looking to exit their business, the woman who taught me a whole lot about exit planning. And if we're talking about exiting in your business, everyone should be looking to exit their business because it's going to happen one way or the other. And it's better if you plan for it. So on that, welcome to the podcast, Julie Keys.

SPEAKER_01 1:18

So good to see you. I love all the things that you're doing out there in the world, the podcast, the book, everything. You're really doing it right. Your clients are very lucky to have you. Yeah.

SPEAKER_02 1:29

We're we're super excited to have you. Um, I kind of mentioned this. Julie is a mentor to my partner, Bill and I. Uh, we I think I met you originally in an elevator as I was trying to escape a social gathering, uh, but it was a happy coincidence. I ended up socializing anyways.

SPEAKER_00 1:45

Oh my gosh, I forgot about that. That's so funny.

SPEAKER_02 1:48

Yeah.

SPEAKER_00 1:49

It was meant to be.

SPEAKER_02 1:50

Exactly. So we're happy to have you on. Um, so hopping into it, your career as an entrepreneur, it's always been focused on helping entrepreneurs succeed. What drew you to exit planning specifically?

SPEAKER_01 2:06

Yeah, um, well, it wasn't a straight line, which for a lot of people it's not, right? Um, so I have, like you you said, I have been an entrepreneur for a long time. I I um I hate to date myself, but I believe our very first company was founded in 1989. And then um, yeah, had several different companies that we owned that were all related to each other in different locations. Um, so we were in the title insurance and um real estate closings, commercial real estate, um, legal, we had a law firm, all of that all like you know, fed each other itself. And then we had a couple of partnerships as well that were um affiliated with that. And that was uh about a 23-year run. Um I learned through that process that I didn't have the right advisors, especially when we went through our exit. And uh there were a couple different attempts. Um, I was just thinking about it today, actually. One of them was several years actually before we ended up selling. And um it was a large publicly traded company that was after us for some reason. It was weird. They weren't located in the Midwest, and they wanted to start an expansion in our area, and they thought it would be easier to, you know, and and because we had such a great reputation and our claim record for, you know, insurance claims was really low, they thought, oh, this is uh gonna be a great, right? And so they strung us along um for over a year, and I learned a lot through that. And that has really helped me and my work as an exit planner to kind of help my clients vet when they when they get these anonymous calls, right? That someone's interested in buying their business. And so, anyway, um, so what I what after we sold, I I became a business consultant. I really wanted to help other owners. And then from there learned about the exit planning institute, realized I didn't know enough about it just because I went through it myself. Like, what does this mean? Who's involved? Uh, what are the things to do to prepare better than I was? And so that's that's how that all happened. And um, so when I was consulting, started that in 2011 or 2010 between the two, and then founded um the company and then became a an exit planner in 2015. And uh yeah, been doing that foot forward pretty much since then, teaching people and helping owners, and yeah, it's been good.

SPEAKER_02 4:40

There's this concept that I keep coming back to, and it's this idea of seeing the end in the beginning. If if you could have gone back to you know, some of the entrepreneurial journey when you're you're building the business, do you think you had this? You kind of talk about how you learned a lot along along the way. Do you think you had the skills to to really see where this might end up and that you might want to transition at some point? Or like how does that ring true for you, that that idea of see the end in the beginning?

SPEAKER_01 5:09

Well, for myself, what I'm doing is uh, you know, creating a lot of valuable content that can be used elsewhere through uh, you know, um coursework and and artificial intelligence applications and things like that. So it's not about me, um, but it is about what I've learned and what I know, and I think that's pretty valuable, um, at least it's proven to be since I started doing this work. Um, and for other advisors, I think uh just like any company, the more, the more the company, the more the business is dependent upon you, the less transferable it is. And so um decentralizing yourself is is one of the biggest risk factors that you can work to mitigate. And so that would be the number one thing that I would recommend. Aside from just having good advisors, like that was a that was another big lesson that I learned. Um didn't have, I was married to a lawyer, right? Um, but but more real estate focused than anything. And and so when it came to MA, he didn't have really the expertise there, but he didn't really want to bring anybody else into the picture, which was unfortunate. So that was a tough lesson. Um we also did not have, we thought we had a good accounting firm. Um, but that whole experience prompted me to find another firm. So, and we did, and we found a really great firm at that point. Like this firm actually had like business owner clients and they were, you know, supposedly good advisors and all that. I learned after the fact that they had been reported to the accounting board twice, which made me feel like, okay, so I'm not crazy thinking these guys don't know what they're doing. But you know, hindsight, right? I didn't know and I didn't know.

SPEAKER_02 6:53

So anyway, yeah, it's an interesting lesson, and and I think we all fall prey to this of if you have uh skills or expertise in one segment, and it may be financial, it doesn't necessarily mean you're an expert expert in, let's say, financial planning for exits or you know, business succession planning or whatever it is, like those transferable skills aren't actually as transferable as we we like to think.

SPEAKER_01 7:17

Totally true. Yeah. And and and as we look at just the exit planning industry itself, which we know has grown due to the fact that there's such a pent-up demand for this kind of help, um, you could say SEPA, and it means a lot of different things. Right? Lots of people are certified exit planning advisors, and EPI is only one of several other credentialing bodies for exit planning. But a business owner doesn't know the difference, right? And like you said, we can't possibly do it all. There's no advisor that ever has all the answers. So I think that that's a really important distinction when it comes to working with an exit planner to understand okay, where do they focus their your primary work, right? And then how do they collaborate with other advisors?

SPEAKER_02 8:09

And so that's a great segue. So I introduced you as an exit planning expert, but that's really an oversimplification. Uh so in it, in addition to being a SEPA and just having years of fantastic experience on this front, I think really being a leader, frankly, in the exit planning world, uh, you're very involved with the Exit Planning Institute, both nationally and uh locally in the Twin Cities chapter. Um, you're a faculty member of the SIPA program. Uh, you run your own courses on exit planning, training other uh you know, future exit planners. Um in all of that work, what would you say is the biggest misconception you encounter from business owners about exit planning? And how would you like to address that?

SPEAKER_01 8:55

Well, I think that there's still a misconception among business owners, regardless of industry, regardless of company size, that that they can make a decision when they feel ready to exit and just do it. And that's a huge misconception because there is so much preparatory work that needs to take place, as we know. When it comes to exit planning, I think that one of the primary distinctions that's really important for business owners to understand is that there's an owner readiness, as I alluded to before, and then business readiness. And so the owner needs to have good advisors to help them mitigate the risk legally, financially, um, from an accounting perspective. And then, and then what am I going to do next? Right. Um, if I have partners, how does that work? I mean, that's that's a that's a huge one lately. Um, different partners wanting different things. Some want to exit, some don't. Um, the buy-sell agreement either is outdated or is ambiguous, or maybe even doesn't exist. And so then they don't really have a like a governing document for them to be guided by. So that could be a problem. Um, and then business readiness, of course, is it transferable? How dependent is it on you? Do you have customer concentration? All the things that would detract value. So don't think that just because you feel in your mind, in your heart, that it's time, okay, because exit readiness is not a state of mind, okay? It's a state of fact. And yes, emotionally, uh, we definitely need to um be ready and think about what's gonna be next, because we can we can fail retirement if we don't have a plan for what's next. And I know you're a specialist at that, Morgan. Um, but but those would be the things that I'm still seeing, regardless of all the work that that I've been doing on this. Although it has helped a little bit, I think, when there's other people out there that are sharing the same kind of message.

SPEAKER_02 10:52

I'm gonna be stealing that. It's not a state of mind, it's a state of fact. That's that's such a good line, Julie, and and and very true. Uh, I think in your book, you mentioned a story about a business owning couple calls you up and they say, Hey, Julie, we'd like you to help us sell our business. We were we were thinking we could get this done within two to three months. How often does that happen where the expectations are so different than than the reality?

SPEAKER_01 11:21

I think a lot of that has to do with not having the right advisors and the right advisors tapping their clients on the shoulder and saying, we need to start talking about this now, right? Versus waiting until all of a sudden there's an LOI and it's like, oh, we have no strategies in place. Oh, we're not ready. Oh, right. Are we really sure we want to sign something like this? So don't ever wait until that point. But yeah, I think it's really the advisors that can have these conversations early and often because it isn't a one-time thing. And for these folks that you're referring to, um, they didn't have the right advisors. And so when I came on board, we assembled a good team, you know, we figured out what the value of the company was, we figured out, you know, a couple of options for exit. And a year and a half later, they had their transition.

SPEAKER_02 12:12

Yeah, it feels like easy steps when you talk about it. But I think if you've been on the inside of a business and obviously consulted with businesses, you know that each one of those projects, A, has lots of shades of gray, lots of minutiae to work through. Um, and B takes a long time. Takes a long time. Um, I'm gonna hold up your book. Uh, it'll be opposite on your screen, Julie, but we've got it, it'll be, it'll be real. This is a fantastic book book. So Poised for Exit, uh, one of my favorite books in the space. Um female entrepreneurs face so many unique challenges at every level. Can you share the top two or three things uh you think female entrepreneurs should know about when it comes to exit planning?

SPEAKER_01 13:00

Yeah, so as we talk about with any owner well before the exit, start really planning that out. And and as a woman owner myself, um, it was really tough to let go of the baby. And men have the same problem, right? We we talk about that when when we talk about letting go and the emotional side of it. But I think that that women especially get attached to their teams, and their teams many times become kind of like their family. Um and and not that men don't have that issue as well, um, but I think women many times particularly do, and and they have a problem with uh wondering who could possibly step in and do a better job than me. Um so there's so that can be an issue. Another issue can be um just uh positioning the company in such a way that it could actually be sold because the vast majority of female-owned businesses out there are not sellable. They're too small. And the problem with that is not that these women aren't capable of scaling a company, it's it's because they don't have access to capital. They don't have the right network to work with the right people who believe in what their plans are and theirs and their strategic growth strategy. Um, and so when you don't have the right network and you don't have the right connections, then you end up bootstrapping. And when you bootstrap, you can only get so big because you only have so much cash, right? And plus you're wearing all the hats, you're trying to do it all. Maybe you got a few employees, um, but you just reach a ceiling and being able to scale is just not there without the right resources. And so what I've seen and experienced myself is is is those are two of the biggest obstacles. And I think that the second one we can really do a lot about and in the MA space across the country and a world and the world really, um, to just involve more female owners. Because statistically speaking, when there are investment companies out there, whether they're VC or PE, um looking at female-owned businesses, the the growth and improvement and and and trajectory of those female-owned businesses is three times the success of male-owned. Three times when when they actually have the chance. Yeah.

SPEAKER_02 15:17

Yeah.

SPEAKER_01 15:18

So so it's a good investment.

SPEAKER_02 15:20

I I think there's this cliche with business owners um where if you ask them what the value of their business is, they're gonna give you a number much higher than the reality. It goes back to your uh you know, state of mind versus state of fact thing. Um, and certainly if you had asked me, I think frankly, before going through like some of the exit planning training what the value of my business was, I would have given you a number higher than reality. And so much of exit planning has helped me think about oh, there's a value to this as a business owner, and I have to take that very seriously. I'm wondering if there's in your experience, have you seen this? Like maybe men tend to be, obviously, we're talking about tendencies, but tend to be a little more overconfident on the value of their business and then be needs to be tethered to reality. And then potentially female entrepreneurs tend to understate this asset and what it could mean to not only them and their families, but also, I mean, to the team that they they care about and they want to be around. But you know, that can be a valuable asset to your team as well. Um, have you experienced any of that?

SPEAKER_01 16:25

Yeah, I think that that um could definitely be a tendency on both sides. And I think also um a positive tendency on the women-owned side is that women are more prone to hire advisors and look for outside help and look for outside guidance, which is which is probably why they tend to be more successful when when they are able to scale their companies, they're just more successful because they they they don't have the pride in in and having to have all the answers themselves, right? And that I mean, that's just the difference between the sexes. It's not right or wrong, it's just the way that it is. And uh, and so I think that that the male counterparts could could take a lesson from that. And and many of them do, many of them are, right? They're not not maybe the the maybe the boomers are realizing that do it yourself uh isn't isn't a path to success. And and recognizing that there are other people with expertise that you don't have, so you don't have to take your foot off the gas when you're you know trying to sell your business and run it at the same time and not lose profitability, those are all super important aspects.

SPEAKER_02 17:30

Yeah, not a sign of weakness, a sign of strength.

SPEAKER_01 17:33

No, exactly. Yeah, absolutely.

SPEAKER_02 17:35

Um, so that kind of helps us transition to um we both write and talk a lot about hiring the right advisory team. You've been talking about that on this podcast. I'm obviously biased. I am an advisor. Um, I still think it's true. What and you've spoken to this a little bit already, but like what attributes would you be looking for as you build out your advisory team? Um, you know, kind of sifting through professionals, let's say.

SPEAKER_01 18:05

Well, I I just truly believe that uh none of us should be hiring to just a resume. I I don't think business owners should hire to a resume. I mean, they're important to you know, factor into the the overall decision, but there's so much more than just the resume, and that goes for advisors as well. So if I'm an owner and I'm gonna hire an advisor, I'm gonna ask around with the people that I know, like, and trust the best, who they recommend. And I'm also gonna ask my own advisors, right? If I'm not feeling comfortable with uh a certain person that I have on my team who maybe hasn't paid a whole lot of attention to me, maybe really doesn't know a lot about the business, maybe they don't have any transition planning experience because I didn't know any better when I brought them on board. And now here I am with someone who simply only prepares my taxes and doesn't give me any other advice outside of that, or maybe just simply runs my company 401k, but I don't have um any comprehensive financial plan for my life because they're not capable of doing it, right? Those kinds of situations happen often. And so who do I know that I trust that I can um, you know, get some advice from on that? And then, you know, there could be some advisors out there who actually have industry specific expertise, and that can be helpful too. Um, not necessary always, but we definitely don't want advisors who are general practitioners because there's just too much to know. And what does that look like? Um like various people in differ in in different disciplines, like people who are financial advisors or people who are accountants or attorneys who are working with individuals as well as business owners, or maybe they work with more individuals and not as many business owners and they're trying to do it all. Maybe like, you know, someone from your perspective, maybe they're doing 401k and they write insurance and they're doing planning and they're doing asset management. Well, my goodness, those are all areas of expertise that almost require like one person to know like that particular focus, right? Same with law, right? Well, if I'm handling divorces and I'm doing estate planning and I'm trying to do deals, you know, on the transaction side, and maybe I do a little bit of employment law, um, that's just a little bit too diverse anymore today. Um, and then and then for people like me who are exit planners, you know, some of us focus on the owner readiness side, which is what you do. Some of us focus on the business readiness side, which is what I do. And then on the business readiness side, you could dissect that as well. Um, I'm not the CFO type of business advisor on the business side. I'm gonna be more the growth strategist and growth improvement person on the business side and and and then collaborate with the people that have the best the best financial expertise.

SPEAKER_02 20:54

Yeah, it reminds me of well, A, I think any advisor, any individual in professional services, you become, you must become very intentional about scope. And if you're not intentional about scope, things get out of scope. And A, either you get out of your area of expertise and you give bad advice, right? You don't actually serve the client.

SPEAKER_01 21:16

Right.

SPEAKER_02 21:17

Uh, or B, the client never even recognizes that they're not getting this other area of value. And and I think as I as I'm listening, it's like A, we as professional advisors need to be very clear on where we have expertise and where we don't.

SPEAKER_00 21:36

Yes.

SPEAKER_02 21:37

I think I I've been to exit planning at you know uh conferences and such, and it's full of people who think they're gonna do everything as they start their journey. And then you see the people who have been there for a few years and they're like, oh no, I do this. You know? Because it's so big, it's so complicated. And there's just no way you can do everything. And then I think as I was listening to you, I was thinking about well, that's so good for the client to know, the business owner, that if their tax repairer that they've been working with for 20 years is saying, Oh, yeah, I can help with your exit. That might be way out of scope. And I don't think you should trust that. I think you should verify it, right? Yeah, they may be correct, but like figure out a way to verify that and keep people within the scope of um where their expertise is and what you actually need. Um, how would you say, and just to kind of wrap this all up, how would you say you've had such an incredible experience on the entrepreneurial and business owning side. You've also had so much experience on the advisory side and also the the education side. Um how would you say just like melding those three together has impacted the way you approach this work and maybe your passion for this work?

SPEAKER_01 22:54

Yeah, I think um I do I do really like to impart um what I've learned, you know, um, to the benefit of other people because my mission has always been to help as many business owners as I possibly can in my lifetime. And so the one-to-many approach for me through these courses and you know, speaking opportunities and things like that, whether it's for a group of business owners or for a group of advisors in whatever setting, um, has kind of been my foot forward. The more I advise, the more that is kind of my focus so I can get to as many as possible because we really do have um a pent-up demand. There's a lot of owners out there that haven't taken action yet or they're starting to and realizing that they have work to do. And that's what we're here for, right? So so that that's that's where I'm at with um the work that I'm doing is just, you know, keep getting out there, one-to-many approach. Um do what we can to have owners achieve the best outcome. Because really, when you think about what a good outcome um involves, right? We've said this before the ripple effect of a good or bad exit impacts many, many people. Right. So it's not just the owner and their family, it's their employees and those families, their communities, their customers, clients, vendors, everybody is impacted by a good or not so good exit. And the economy too, right?

SPEAKER_02 24:20

Yeah, such a good framing. Um, Julie, thank you for all you do. Thank you for being such a mentor to us, but also just a guide in the exit planning world. Um, and thank you for joining us today. Very appreciative.

SPEAKER_00 24:33

My pleasure.

SPEAKER_02 24:34

You can learn more about Julie and her work uh and her book, which once again I suggest you read in the show notes. Uh, and be sure to subscribe to the podcast and follow along with us on social media for more tips on business, exit planning, and living a life on purpose. Thank you.

SPEAKER_01 24:51

Love it. Thanks so much, Morgan.