Being an Engineer
Being an Engineer
S6E38 Wally Waldron | How to Successfully Exit A Manufacturing or Industrial Services Business
Jason “Wally” Waldron is the founder and CEO of Exitology, a company dedicated to helping custom manufacturers, industrial services, and supply chain firms scale their businesses rapidly and exit with maximum value—on their own terms. With nearly two decades of experience advising business owners and engineering-driven teams, Wally specializes in accelerating company growth—up to 33% per year—and unlocking $10M+ in trapped business value in as little as three years.
He’s not just talking theory. Wally’s background in marketing strategy, business development, and organizational systems spans work as a fractional CMO, partner in marketing and equity firms, and years of hands-on growth consulting. His methodology blends actionable frameworks with a deep understanding of the unique needs of technical founders and engineering-driven companies.
In his book, Exitology: Unlock Your Profits, Unlock Your Potential, Wally outlines how business owners can break free from the day-to-day grind, regain their time, and create companies that grow without them. Whether owners are looking to sell, hand down the business as a legacy, or simply step away with confidence, Exitology provides the playbook.
Wally’s mission is to help founders create both financial freedom and personal fulfillment—without compromising their engineering integrity. He currently works with $10M to $200M privately owned firms in sectors like custom manufacturing, commercial construction, and industrial services, and has built a reputation for helping leaders transition from “success” to “significance.”
Connect with Wally on LinkedIn: https://www.linkedin.com/in/wallywaldron/
Visit the Exitology website: https://exitology.com/
Aaron Moncur, host
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Hello and welcome to the Being An Engineer podcast. Today's guest is Jason Wally, Waldron, founder and CEO of Axiology. Wally helps custom manufacturers and industrial service companies grow up to 33% annually, add 10 million or more to their business value and exit on their own terms in as little as three years. He's also the author of Ology. Unlock Your Profits, unlock Your Potential. And joins us to share his insights on building legacy, freedom, and massive value into engineering driven businesses. Wally, thank you so much for being with us today.
Wally Waldron:Aaron, thank you for having me.
Aaron Moncur:You are so welcome. So I've, as I was telling you before we started recording here, I've been excited to talk to you because I own an industrial service business and while I have never seriously considered selling it. Who knows what the future holds, right? 10 years from now, 15 years from now, maybe I'll be ready to do that. And so it would be probably wise of me to get some best practices under my belt now so that I have options in the future. And I imagine there are plenty of other listeners who are listening to this episode right now who are in the same boat now, or maybe in the same. Boat in the not too distant future. So, uh, I'm super excited to talk with you about this and, and, uh, learn about exits for manufacturing and engineering businesses.
Wally Waldron:No, I, I think that's outstanding. And, um, you know, I'm, I'm thrilled to be here and I'm, I'm a student of the game, and as I shared with you, uh, while we were, uh, doing our sound check and everything, I'm, I'm gonna treat you like you're. My highest paying customer. So ask every question under the sun, whether selfishly or for, for some of the folks listening, and I will do my best to answer, uh, with, with antidotes stories, best practices, and whatever wisdom I can share today.
Aaron Moncur:Terrific. Thank you so much. Okay, so first question is, how did you start this, uh, ology? Where, where did it come from?
Wally Waldron:Yeah. So, um, the, the way that I like to answer that is ology in its current form is seven pi pivots and a couple close calls, uh, almost going outta business into, to what you see here today. And, um, you know, like, like a lot of entrepreneurs, I, I had the entrepreneurial seizure fairly early on in my career. Um, I was working at an accounting firm that had all of the different, uh, uh, disciplines under one roof. And I was bored. I was bored outta my mind. I was sitting there in the summer of 2003 doing, uh, you know, uh, upgrades of IT systems and, you know, the most important, uh, and interesting part of my night was making black coffee and talking to the janitor. Not any of my, my day job, which somehow was at night at that point. But the, uh, know, I was sitting there thinking, man, there's gotta be something else to this, this career path. And so I was, I was in my early twenties and, um. So I started to get curious about, you know, what, what was possible with this, uh, career path ahead of me and I, I started to, uh, look around and got creative about it, and I started a business called Albin Tech Technology Solutions. And my first client was a startup ski manufacturer. Who was pressing skis out of his garage. And I looked at him and I said, I'm pretty sure you just, uh, raised some capital from that guy up the road there and that you don't have a business entity. I think that's illegal. I'm bored. You are starting a company. I work at an accounting firm. Let's see if we can help you make this a go. And was the, uh, beginnings of what became ology, uh, nearly 25 years later.
Aaron Moncur:Wow, 25 years. Congratulations.
Wally Waldron:you. Thank you.
Aaron Moncur:Your first customer was a ski manufacturer. Uh, that's of course just one data point. How did you get into this niche of manufacturing and industrial service companies?
Wally Waldron:You know, um, I. I, I don't know if I meant to. Um, to be totally honest with you, looking back every few years, uh, we go through a process and that is we, we do a look back, look forward analysis, right? And look back is real simple. What worked, what didn't worked? What do we think we want to keep and move forward with and look forward is. on what was working and what we think is going to keep working, where do we think the winds are blowing and how can we add value? for whatever reason, over the course of, uh, of my career, whether it was just understanding, uh, what an engineer is up against or just, you know, uh, our, our methodologies being very good for those types of people, or maybe just. Pure luck. I really don't know. Our methodologies have lined up the best with folks who are very, very good at creating, uh, products, creating innovative solutions, and frankly, are people who are a lot smarter than I am and helping put a business wrapper around what they're doing and so they can do what they do best.
Aaron Moncur:All right. Well, this podcast is specifically focused on engineers and manufacturing pro professionals. So let's, let's talk about engineers a little bit.
Wally Waldron:Mm-hmm.
Aaron Moncur:Do you think that the engineering mindset, this, you know, very analytical, logic based mindset, do you think it helps or, or hinders the process of scaling and exiting an engineering slash manufacturing company?
Wally Waldron:Yeah, so we. When you sent over that question, just had to smile and chuckle because, you know, let, let's, let's skin the onion a few layers at a time. Right. So we, we'll start with the real answer. It depends, right? That's the real answer here. But, but I, I go back and think of a place here. Um, I'm, I'm based in Evergreen, Colorado, which is just outside of Denver. And if you drive west of Denver on your way to Vail, you will pass through. A, uh, small town. It's called Idaho Springs Colorado. And Idaho Springs, Colorado is where the gold rush began in 1859 Colorado. what happened was over a very short period of time, out of nowhere, a entire town that is still here today was created out of nothing because hey, there's golden them hills, and here comes everybody looking for some gold, right? Well, on one of those hills, 108 gold mines were created. You know, and we all know what a gold mine is, right? You just keep pounding three more feet of gold, three more feet, and get we'll get the gold. We'll get the gold. And what happened was they started to flood and, and you know, no, nobody knows why. Just nature. And somebody zoomed out one day and said, you know, this, this whole mining business is pretty tough. What if we put a single drainage ditch a tunnel from Central City down into Hido Springs and I drained 108 gold mines, and I promise you this is coming back to answering your question, what what that created was something that was both strategic end of lasting value. 108 gold mines. Were then sending their material down a single source tunnel to the end of. Of this, uh, area, they built the, what is the Argo Gold Mill? There is still to this day, a giant gold mill sitting there on the top on, on the side of this mountain is being used for tours now is still creating value for the same place that it was built over 150 years ago. Right? And the most important and interesting thing is that all that gold, which was more valuable once it was milled into something and put on a train, sent down the stream. It provided the impetus for Denver, the Denver Mint, and all of these things that still are part of our society today.
Aaron Moncur:Hmm.
Wally Waldron:And so to answer your question, going back to it depends. What I always invite people to think of is, are you that gold miner? Are you just pounding for three more feet of gold, hoping for the best? Or are you taking a pause and zooming out to 30,000 feet and looking to be the Golden Miller? other words, are you thinking strategically? Are you thinking like an
Aaron Moncur:That's a great distinction. I love that. Um. I know that I, I have this. Sense, uh, based on mostly my own experience that engineers can make very good business owners because they understand math, they understand numbers and businesses, uh, not entirely. Of course, there's absolutely a human element to it, but there's also very much a, a numerical element to running a, a successful business. Um. I think that engineers have an edge in, in that area, but, but clearly engineers are, are not quite perfect. We're pretty close as far as humanity goes, but not quite. What, what are some of the mistakes that you see technical founders making when, when they're preparing for an exit?
Wally Waldron:Yeah, for sure. So, so the reason I start with that, that concept of, are you a gold miner or a gold miller is, can you actually out of your own way? Right? Can you zoom out and look at your own business objectively? and so zooming back, um, to your point, engineers are amazing people to do business with because of their mathematical acumen, right? Because of their reasoning, because of, you know, ultimately you talk to enough engineers, you can pretty much distill everything into some sort of algebra equation, right? so that. That's their strength. But a strength over extended can become a weakness. And so that's where I keep hammering home to that mindset. Can you actually get creative enough and ask enough impossible questions? Or even, potentially can you have someone else guide you through arriving at a more creative and expansive view so that then you can go back and do your engineering thing to bring that forth. And so, so sometimes one of the, one of the issues that we see is that you're almost too good at what you're doing. And, and so you are act, whether you know it or not, you're caught in that proverbial gold mine, right? You're just, you're, you're so comfortable at optimizing everything that is that you miss the big picture and then somebody passes you by, right? Um, so, so that's, that's a mistake is just, you know, perhaps being too good at the small things that you miss the big picture. Um, another thing, and, and this is really important as it pertains to. Really all founders, but um, you know, technical and engineering founders is, are you beginning with the end in mind, right? Have you thought about what your business might look like one day when you exit it? And as much as it pains me to say it, uh, you will exit your business, right? Um. So there's really only a choice. Do you do it consciously and with options because you've prepared or does it just sneak up on you and happen to you? um, you know, the, what that looks like a lot of times is almost being too smart to ask for help. That that's one way to do it. Um, another way is starting too late in the process, um, a lot of times is, you know, and, and it hats off to everybody listening. A lot of times people just aren't educated. And so if you're listening to this, you're on the right track because you know you're not gonna unhear what we're talking about here today. You're gonna think about things that maybe you didn't know about. And, um, so I, I was, uh, recently having dinner with a gentleman in the medical space and he told me about how he grew up and it sounded amazing 'cause it was in the middle of the Midwest. And, and he grew up for a guy that sounded basically like he could have been one of the HP founders, you know, super engineer, geek, uh, very regimented in everything that he did. And when this gentleman was growing up, his, his house turned into a factory basically. And that's how, that was the entire world that he grew up in. And you know, unfortunately dad and mom are still part of that business and they're in their eighties now. And this guy, I mean, I don't know if we're ever gonna be able to help him because his hands are tied. He's running this business and he's doing the job. That should be worth multiple. Multiple, hundreds of thousands of dollars every year, and he should be in control of this business. But he does is go into work and get mad at his family members, like his sister, who is somehow installed in a power position in this whole thing. And so, you know, back it out, right? All they forgot to do was plan ahead and they didn't. They didn't know what they didn't know. And now. They, they're in the, you know, they're, they're trapped, right? So the idea here, um, you know, let's invert that situation. Let's plan ahead, let's think ahead so that you have options along the way. So that's what it's really about.
Aaron Moncur:Powerful words, powerful words. Um, planning ahead, uh, you know, 99 times out of a hundred leads to a, a better outcome. Maybe 999 times out of a thousand leads leads to a, a better outcome. Right on, on your website you have, uh, some, uh. Um, potential better outcomes that you have quantified in numbers. You, you talk about, uh, business owners in this niche can grow 33% annually and add, uh, 10 million plus in value to their business. Now we should qualify that this, this is for businesses who are already doing, I think it's five to a hundred million in, in sales. And their average sales price is, uh, $10,000 or, or above. So there are some qualifications there that you have, but I imagine the real answer to this question is also going to be, it depends, but, uh, are there any, um, generalities that, that you can make or, or share about how you go about doing this?
Wally Waldron:yeah, 100%. So, um. You know, I'm glad that you, you brought that up. So it depends, means a couple different things, right? One is, let's look for the common thread of what these success stories look like, and let's look at what conditions ought to be in place, or really, frankly, need to be in place. To achieve such results, right? And so the first thing is, yes, you want an average order value of $10,000 or more. Um, this implies typically some type of B2B sale. This implies typically something of high value. Um. The other thing, uh, that you wanna see is, uh, lifetime customer value of a hundred thousand dollars or more. And again, going back to what I shared with you a few minutes ago, none of this is magic. This just came from an analysis of looking back and saying what worked really well. Looking in this direction, how can we apply this even better going forward? And so, um, the most important thing we've already touched on, and that is an owner and frankly, uh, leadership team who can think like investors, right? So someone who can think in terms of saying, what would it take to build a system that was trackable and accountable to the marketplace, to ourselves, that could be predictable, that could send. Enough, um, business, you know, to, to grow 33%, right? Um, so there's both a, a marketing side of it and a sales side of it. So you need a high performing sales team, and it could be a high performing sales team of one in some, some cases. Usually it's a high performing sales team of more than one. Uh, by the time we're talking about these size of businesses, 'cause what, what you're talking about here is really getting into the middle market of, of privately owned businesses. Um, the, the way that they talk about that is five, five to $10 million in revenue is typically, uh, talked about as the upper main street market. And there's a lot of great businesses that are that size. And, you know, in a perfect world, we would love to find businesses around that $10 million revenue area. Grow them up to 30 million and then help them exit. And, um, just so that the listeners know, we've, we've helped businesses as small as, as I shared with you, you know, um, my friend who was literally pressing, uh, skis in his garage, uh, to start. And now they're a, uh, they, they're celebrating their 20th anniversary this year and they're a worldwide brand of skis. Um. and there's, they're, uh, to my knowledge, they may be the only mass produced ski that is still produced here in the USA. Um, and I don't know that for sure, but they're, if if they're not the only one, they're one of the few. um, I think that's great. Right. And, and so, um, going back to your question, you know, what else do you need to see? You need to see, uh, we talked about that owner's mindset. We talked about high performing sales team. We also need capacity. Or the willingness to build capacity. And so a perfect situation to us, uh, happened a few years ago, and when I share this with you, um, I'm, I'm gonna be the first to say that I have no idea if everything is going to fall in place the way that I'm about to describe. And we found a company, uh, we knew the, the founders and the owners from startup, and they literally started in a shed in 2014. And they were in, uh, the northern Colorado area, and we stayed in touch with them. one thing led to another, and sometime during COVID they overbuilt their capacity. They had, they had built and scaled a very nice company. It was in the oh, 12.5 revenue range every single year. the first question I asked him was, okay, you finally came to me so that we can do some business. And we've stayed in touch all these years. What, what does the end look like? Right? Begin with the end in mind. What? What are you really trying to achieve here? We are trying to exit for top dollar as much as possible. Okay. Why? What's driving that? We're stressed out. We're a young family. We're in our thirties and we built about $25 million worth of capacity, and we're only halfway full. It's, expensive. We went into debt to do this. I mean, it, not to put too final point on it, mama was freaking out, right? And so, all right, let's look at these. Let's look at these, uh, potentials for you. So we, we took 'em through process. We talk about it in Otology. Um, there, there's a, there's kind of a quiz you can go through. I wanna say it's on page 1 0 9. Don't quote me on the exact, uh, page number, We just broke down the business and, and we asked that question, where's the next million dollars already hiding in this business? Where's the next $10 million already hiding in this business? Where's the next $50 million already hiding in this business? And for my engineer friends here, what we're doing is we're really getting that subconscious going, and we're asking questions that you already know the answers to because you're an engineer. The sub routine's been running forever. It just hasn't come up to actually be put on the chalkboard, so to speak. So. You know, if, if I look at you right now, Aaron and I say, Hey, where's the next $10 million already hiding in your business? I see how you're smiling right now. You're starting to come up with ideas, right? And so we go through this exercise and then we start to create a path, right? Well, is it 10 million or is it 20 million, right? Is it 10 million or 5 million? And, and we start to reverse engineer from a future state. Does that make sense?
Aaron Moncur:It does. Yeah. Yeah.
Wally Waldron:yeah, so, so in this case, this one had a great ending because what ended up happening was we put a minimum of $2.3 million of additional revenue on the top for them, and they exited to private equity at the end of 2022, about four and a half months. so, um, the crazy thing about this whole situation was that we were trying to do this in 18 months. And so, and it accelerated because the sales on the top end were accelerating so fast. The net profit was flowing to the bottom line and the external environment. And this is, this is an important part of the third part of it. We can't take any credit for most of what happened except for timing, because we did, we did our best work like we do in any economic condition. But we can't recreate a situation where cheap money is starting to run out of time. Silicon Valley Bank had not yet crashed. SPACs, were starting to say, Hey, we better buy something else. We're gonna have to give the money back. And so all these things happened and we and the client more importantly, were the beneficiary of that. And so mom got to go and be, mom stepped down completely and retired in her mid thirties. Young family Dad got a second bite of the apple. He still has this great place where he can go and innovate like the engineer that he is, but he doesn't have to worry about all this extra business stuff. Right. It's a really great story and, and I, I, I think it's a perfect outcome for an engineering minded person. Awesome.
Aaron Moncur:That's awesome. Wow. Um, so this, this family did, uh, a lot of things right.
Wally Waldron:Mm-hmm.
Aaron Moncur:Do you have any stories that are educational for us of a founder? Of course, without going into any confidential specific details, but of a founder who, who didn't do everything right and things didn't turn out so great.
Wally Waldron:so, so before I answer this, here's what stinks. Um, the, the odds are stacked against you and so. I'm, I'm going to give, I'm gonna paint a, a broad stroke picture, uh, with, with a very specific person in mind to tell you, you know, one of these horror stories. But, but here's these, the statistics are stacked against you, and really one of the reasons why we exist here at Ology is to push back against what is very hard. It, it's very hard to achieve that perfect exit like we just, uh, described. Right? In reality, what usually happens is if I walk into a room 40 engineer business own right, industrial engineer business owners who wants to exit in two years, they will all raise their hand. Me. Oh, that sounds great. Oh, that's awesome. Yeah. Right on. And here's the truth. You don't have the first clue about what I just asked you, because I come back two years later and I ask you a different question. happy and there's one person in the corner saying, I'm happy. And they're happy.'cause they're happy on a personal level, on a financial level, and they're happy with hap their business outcome. There's seven other people who are happy one of those things, but they're experiencing profound regret. That's exactly the word. And we, at the Ex Planning Institute, we have the studies to back all of this up, and there are 32 people who have not even exited yet. And so you have a one outta 40 chance in doing this, right? And so important that we know what we're dealing with. And, and, and now that, you know, you can't not know that, right? Uh, you. and check my work. Uh, look up the state of owner readiness surveys that have been done by the Exit Planning Institute over the last 10 plus years. Um, you know, you can go and look it up yourself. Please do. In fact. But the fact of the matter is you have a one 40 chance of doing this. Right. And so I'll, I'll give you an example. Um, this is a company who, um, we worked with them from oh, for about 15 years and. When we first came in there, um, going back to an earlier iteration of what is now ex tology, we were mostly doing, uh, workflow and operation support from more of an IT perspective. And then, and then as time went on, expanded that into a full online marketing and, uh, SEO program and all these things to bring leads to this company. Uh, we repositioned them, uh, from a marketing standpoint into, um. A, a higher value offer and, and, you know, so we consulted all up, down, and all around is my point. We knew this company very, very well unfortunately the owner, uh, did not have. That long-term mindset, so the mindset of an investor. And functionally what would happen is would get really, really excited about the early, bright shiny object was that we were talking about. And we would go gangbusters on some project for nine months, and then the rug would be pulled and then we wouldn't hear from him for a year or two. And then it was, oh hey, yeah. do need to work on X, Y, and Z, and we go gangbusters again and. If I had had my preference, uh, I would've much rather gone marathon pace for a much longer period of time instead of sprint pace and zero pace. Right. interestingly, um, sometime around 2017, 18, when we were working on early versions of what became Exo tology, the book, I started putting a lot of concepts in front of this gentleman and one of those concepts, I remember him exactly after being presented to him was. That won't work. What else you got? And unfortunately, in a very short period of time, what I saw happen was the business lost control of clarity and control of its numbers. The CFO jumped ship and a new one was brought in and essentially became a turf builder. And she, rather than transparently owning the role of CFO, kind of had a little kingdom within the business. At the same time, the business owner. Uh, who was friends with his number one sales guy, right? Remember what we need here? We need a mindset. We didn't have it. The next thing is we need a high performing sales team. Well, over the course of those few years, I saw him fire all of his salespeople except for the last remaining one. And then the last remaining one got so mad at him for whatever reason that he essentially did, you know, the, let me lock the keys in the desk and then get outta here. So, and we're talking. Someone who we went to college with. So whatever they were mad about, this is like bitter old woman fighting type stuff, right? Even though it was two dudes. And so, um, sorry, uh, not very PC in anything I just said there, but the, uh, what I'm speaking to though is, you know, disagreement. That's one of the five D's that kills business. You divorce, I talked about a friendship, divorce, basically, right? Um, fortunately I did not talk about disability. Um, but I saw multiple people working in this business, including the owner, go through disease. Uh, nobody died to my knowledge, although death can sneak up on you and that's not good. And I'll, I'll add a sixth, sixth one that you'll gotta watch out for and that's disruption. And so, um, this business was limping along with all of these problems going. and then COVID hit. And the last time I talked to this business owner, uh, he did not live anywhere near, uh, where he used to live be, which was a beautiful place. He was sad and working for someone else, and. You know, the bank, as far as I know, the bank is just owed a whole bunch of money that he's gonna pay off the rest of his life.
Aaron Moncur:Hmm.
Wally Waldron:it was, it was bad, man. Um, I don't know. There's no technical term. It was, it was like on a human tragedy level, it was really bad.
Aaron Moncur:Yeah.
Wally Waldron:and so, so I hope, um, for the listeners out there, you know, we're, when we're thinking engineer minded, right? It's like let's invert all of that in that story and. options, right? Let's, let's support our lives through our business. Let's not accidentally go too far down the minor hole to find out that roof is collapsing in on us.
Aaron Moncur:Yeah. And that takes some, some discipline, right? I remember a long time ago, I don't remember where I saw this, but it was a very, very simple image of two funnels next to each other. And the, the, the funnel on the left had, um, a very wide opening on top, and then the narrow opening on bottom. The funnel on the right was flipped. It was the opposite. It very narrow on the top, very wide on the bottom. And the, uh, what this image was, was trying to convey is, uh, I think you could apply it to a lot of different things, but if you're, you're disciplined. Um, so looking at the right side image, right, you, you have a very narrow beginning, right? You're operating within pretty disciplined boundaries
Wally Waldron:Yep.
Aaron Moncur:that eventually leads to a much wider bottom or future with a lot of options versus the other one where, you know, I'm, I'm doing whatever. I feel like I've got all these options. In the beginning, it feels like everything's great pretty quickly that that funnels down to a very, very narrow set of limitations that all of a sudden you have to live, live within. Um. You, you, you've talked about how 80% of a business owner's wealth is, is often trapped inside the company. What, uh, talk about that a little bit. What, what does that mean? How do they unstrap it?
Wally Waldron:Yeah, for sure. So, so again, I'm relying on the, the state of owner readiness surveys that, um, so, so I, I, I, I, I should enlighten everybody on that a little bit. So, um, not only do I run a company called Ology, but I personally hold a designation that's called the Certified Exit Planning Advisor designation. the reason that's important is that, uh, SEPAs, as they're called, they, they are taught to follow a methodology called the value acceleration methodology. And it's, it's important because there's actually a concept of the three legs of the stool where you want to get aligned as a business owner. Um, and so the three legs of the stool look like this. Am I aligned? In my business, financial and personal goals. So the first thing is goal alignment. And the reason I mention this larger world of the certified exit planning advisor is because if you, if you go through this process by the book, then you actually go through two journeys at the same time. You go through the personal journey and you go through. The business journey, at the end of the personal and business journey, you should go from where your person and your business is super intertwined to where your personal and your business are completely separate. And so we call that decentralization of the business owner. the concept here is first I identify as a, as a person. What my wealth gap is. And so, uh, the easy way to do that is take whatever the top line of income is that you personally need to live on every single year and, and do that before taxes. So let's pretend it's a hundred thousand dollars just for the, know, a, a number to work with. And then times that by 25. So in that illustration, that would be $2.5 million. then ask yourself, do I, or do I not have that amount of money separated out from my business, working for me to basically create runway that I can live off of the rest of my life? that's your first calculation is your wealth gap. But more importantly. What is the business value today? Because if you can figure out how to look at your business as if it's part of your personal wealth portfolio, and this comes back to that whole mindset of an investor, very likely you can start to see how to manage all of your efforts in a way that can create enterprise value and then transferable value eventually. so you might find out, Hey, I'm, I'm short.$1.5 million here. Okay, well, you probably need a business that's worth at least $2.5 million then so that the tax man can come and take his cut, and then you can exit on your own terms with that money and. Again, I'm just using very easy to think about numbers. Oftentimes, they're gonna be a lot higher than these numbers, but the point being, once you can start to look at your business value on the one hand as part of your, uh, financial plan, and then look at it against your personal financial plan, you can start to figure out how much one is worth and how much one could be worth. And that is, what's my business value today? What could it be worth three years from now? And so. That's, that's the first step. And the idea here is. That there is $17 trillion of enterprise value, business value that is sitting in privately owned businesses today and over the years, as we look at these businesses, it's very common that the business owner will have about 80% of their personal wealth trapped in that business. And that's because they're so intertwined bringing that back to the square one. So if we can decentralize the business owner and build a business. That ultimately gives them options. is where, uh, instance, um, you know, we talk about creating a passive business with the business you already own. What is that really? That's called becoming a chairperson. You can still, right, let's have, let's have the business run. have you ease into the next phase of your life so you don't freak out so that you don't have profound regret. You can still manage your baby over here and then. Buy yourself time to figure out your next phase. And so there's a lot of ways to do this, but the most important thing is to first identify very clearly where you are.
Aaron Moncur:I have heard that manufacturing businesses will often sell for three to five times ebitda. I'm sure this is also, it depends, but generally speaking, is that range roughly accurate or have you seen vastly different, um, multipliers.
Wally Waldron:Yeah, so, so it depends as it always does, but, but what does it depend on? So what you described there is, is where you see a lot of these companies, uh, end up. But, but let's, let's break it down here for a second, because. E EBITDA is just one part of the whole story. And so the first thing that we wanna look at is what's called your tangible value. And that one's pretty easy to figure out. Let's take the last three years of your p and l. Let's recast it the way an outside investor would. So that means if you're buying cars through the business that. Our expensive the tax man or the tax accountant said, you should take a write off. We might adjust it so that it's more reasonable and stuff like that. Right? And, uh, just so you know, there's no harm and no foul in doing that. It's, it's a wonderful part of the whole system, but at the end of the day, you want an accurate picture of, of that recasted EBITDA as a starting point. But much more importantly, we want to analyze the business for all the intangibles. So we're looking at structural capital. How does the business run from management rhythms? What does the org chart look like? Things of that nature. Um, what does the social capital look like? What's your branding look like and how do people feel about it on the outside? What's it like to walk through the halls and actually work there on the inside? That's an important question and there are ways to quantify these things. Um. What does your customer capital look like? And, uh, one, one of the things that I would absolutely want to leave with the listeners here today is if you have a single customer that represents over 20% of your revenue. That's customer, client, um, client concentration risk. And it's a giant risk. And if, if you hear nothing else from this, from this, uh, podcast today, that's, that's the first thing you're gonna want to go about addressing, uh, from a business standpoint. And then, uh, what's your human capital look like? Are, are there a players that work there, C players? Um, you know that horror story I told you 10 minutes ago? You walked in there and it was a bunch of C players and so. You know, the business fell apart. Uh, the really nice story I told you a little bit earlier than that. A players, so, you know, take, take, take that, uh, as, as it's meant to be taken. But, but at the end of the day, those intangibles, uh, those, those other four capitals that I just described, that's what drives the multiple on your ebitda. And so there's a lot of different ways that we wanna be optimizing and setting these business up for success. But I can't emphasize enough that until you've done some type of measurement exercise and looked at your business the way outside capital would. So that you can look at your business like an investor would, you're, you're flying blind.
Aaron Moncur:All right. I've got a question for you that I am. Mostly sure is related, uh, largely to, to my own head trash. So you might have to put on your, your therapist or psychiatrist hat here for, for just a minute. But let me, let me share this thought that I have. What, when I think of a, a business that runs mostly without the business owner, which for many people is the dream, right? That gives you all this freedom. You, uh, you can do what you want. You, you don't have to be at the office at at work every day, but. Personally, what, when I think about that from a cultural standpoint, and I think about my team showing up to work every day, I'm not there right? In this theoretical scenario, I'm not there. I, I'm, I'm, uh, in Hawaii surfing and just having fun, right? I'm not, I'm not putting in the hours at the office. I have to. Imagine that that would be like such a, a demotivating force for the rest of the team. Uh, is this something that, uh, this kind of head trash, uh, is this something you encounter frequently? Do, do you get pushback from owners who are like, no, I have to be there. I, I like the team. I owe this to the team to, to still be there. And how do you address that?
Wally Waldron:Yeah. So, so first of all, um, let, let, let's address it on the head trash level, right? Um, you are, you already said the, the answer a million times. It depends, right? And, and, and so, so, so here's why, right? Um, a a lot of it probably depends on what phase of the game the, the, uh, business is in, right? Um. If I think of this, uh, ski company that we've talked about in the early days, that was all hands on deck, right? We're going zero to one. We're going from nothing to startup to scale up, like we're all in it together. now that they're 20 years in. Founders coming around. That's a day that just like, that's an unproductive day. Like, what are, what are you doing here? Why aren't you out there evangelizing for this thing? Like, why are, why are you here? Right? So, so, so what happened in between, um. Proper structures and proper culture was put in place. Right. And, and so, and it back to alignment, right? Um, we're, we're working with a company right now who is halfway in between this, this whole phase where they rolled up a couple other smaller businesses across a larger region that they work in. And the original office is the one with the culture. And that's the culture we want on these other offices and these other cultures are lazy and all this other stuff. So. Takes a couple years. It's like, so are the other cultures in these offices really lazy or did we just not deploy your new general manager to the other two places enough to them the, the new culture? It was that simple and right, the, the owner nobody wanted the owner to come around. They just wanted the general manager to make sure that they had what they need so they could actually live up to the culture.
Aaron Moncur:Uh, that's an interesting shift in perspective. Yeah.
Wally Waldron:right.
Aaron Moncur:Yeah.
Wally Waldron:So, so, so the, lot of times, depending on where you're at in that whole thing, what, what we recommend is, you know, looking for, um, you know, one, once you're ready to look at your business as an investor, right? Obviously that's the key that we keep hammering home, but we want to see, you know, building that capacity. Part of that's the mental capacity of the owner. Right. And how do we do that? We, we, we put proper management rhythms in place. We get them an operations leader as fast as possible, a lot of times we help them get things off their plate just to see what it's like. You can always
Aaron Moncur:Yeah. Yeah. Right.
Wally Waldron:So, yeah. Is, is that helpful from both your perspective, but hopefully for the audience as
Aaron Moncur:Yeah, it, it is, it is. That's an interesting shift in, in perspective that I hadn't thought about before. The, the fact that, um, teams might not want the founder around. Maybe they're more productive when the founder isn't there, you know, asking questions and sticking his or her, her nose in the mix of things. Um,
Wally Waldron:can I, can I share an antidote from our
Aaron Moncur:please, yeah.
Wally Waldron:So. Yeah, that whole concept of eat your own dog food. Right? And so, so we went through a round of this type of growth a few years ago. Um, and, and this, this might actually answer one of your original questions at the beginning, which is why do you get along so well with engineers? I, I think I might be one at heart. Um, I, I know I'm a systems thinker. I'm always trying to, you know, look for the patterns 'cause they just arrive all the time. And if I could, I don't know, put everything into an algebra equation or a spreadsheet, I probably would. And so the. Yeah, the thing that I was doing was, um, basically not giving people ownership over their roles. So it was there on a piece of paper, but it wasn't actually a lived experience. So we came up with some shorthand, and the reason I'm sharing this with you is for two reasons. One is I get exactly what you're going through, and two, here's what worked for us. Um, I made a new agreement. I said, Hey, if, if I've given you something and I'm starting to. You know, do that whole pigeon thing, fly in like a pigeon poop on everything, and then float out of there again.
Aaron Moncur:Siegel Consulting. I've heard that.
Wally Waldron:There you go. If I'm doing that, you, you call timeout and, and literally they're allowed to do this, right? The timeout. And you look at me and you say, thank you, I've got this Now get out of my office.
Aaron Moncur:That's great.
Wally Waldron:So.
Aaron Moncur:Uh, all right, I I have a question for you about Mark sales and marketing. All right. Uh, I know from personal experience that engineers are great at engineering and systems thinking and logic and operations and organization execution, but most of us are not great at sales and marketing.
Wally Waldron:Yep.
Aaron Moncur:How, how do you guide. Engineering, manufacturing companies, uh, given that sales and marketing, like that's kind of an important part of, of growing and scaling a business. How do you guide companies that aren't naturally good at those things?
Wally Waldron:Yeah, for sure. So, so it's a really important part of the equation. I'm glad you asked me that question. Um, so first of all, going back to why we believe we're good at working with engineers. from a marketing perspective, one of the skill sets that we've deployed into the market for most of that 25 years that we've been around has been direct response marketing of one type or another. And that's very different than a lot of the marketing that you saw over the years. And direct response is trackable down to the penny. It's trackable down to the leading indicator, and you can always improve upon it. And I think that. As a baseline is an important context to set. There's nothing that we do for a client isn't tracked, improved, kaizen, all the things. That's, that's number one. Number two is we've systemized it to the point where we can really understand and, and, and a great portion of the book that I wrote is about what is a systemized and trackable marketing system look like for. A manufacturing firm for an industrial firm. And the reason for that is because theoretically, you should be able to read my book and implement it yourself and see great results then. Get that growth engine going and then call us to do version two, three, four, five, six. Right. And at the end of the day though, I think that's important from a tactical perspective, but why is it important from a strategic perspective? If you can get the growth engine going on the front end, you can, uh, self-fund all of the initiatives to have all of the exit options available for you. that's huge. And if you know. That you are not going to do it. You know, your competition is not doing it by doing it. You're putting yourself at an advantage. Does that make sense?
Aaron Moncur:It does. Yeah.
Wally Waldron:Um, taking it up even another level, what it does, as we give you options, you might be able to grow through acquisition, which would then very rapidly increase that three to five x multiple. If you go through acquisition and get big, fast enough, you now have the story of stories. Your marketing story is actually your exit story. Who. Could you be more valuable to who has more resources, a bigger platform, and potentially a lot more money. what they need to do is just scale what you're great at. And so it always opens up more, uh, options both on the back end strategically, but also on the front end to actually fund, uh, initiatives.
Aaron Moncur:All right, Wally, one more question and then, and then we will wrap things up here. Um, this may have been answered kind of roundabout as we've had our discussion anyway, but let's, let's see if we can provide some, uh, a very clear, concrete answer to it. What do you think the, the biggest mindset shift required for a founder to go from operator to, to someone who's ready to let go is.
Wally Waldron:So it, it comes back to that gold miner versus gold Miller, right? So if you wanna let go find your flow, but if you, right, and so what I mean by that is you're an engineer. You already know you're strong on the left brain. You've gotta, you gotta step out and actually get creative and ask, what do I want three years from now? Where do I wanna be three to five years from now? And then I'll ask you, which is it three to five years, right? Let's define that thing. But you w you wanna get way out there into that flow of creativity and then come back to your day to day and engineer those success conditions. And so oftentimes, and, and, and again where, um, you know, I'm, I'm as guilty of this as anyone, which is why I also hire consultants to help me get into that state. you know, the left brain part is easy, but visioning and understanding and seeing a new future for yourself where it might not have been, find someone who help you with that. And oftentimes it's as simple as, you know. Your wife or maybe your daughter or maybe a friend of yours or whatever, right? Um, but, but find that person and, and really get creative about it. And then create an exit thesis for yourself your engineering mind can take over from there. And I think you'd be in a much better place. Alright,
Aaron Moncur:I lied. I There's one more question I'd like to get your, your feedback on. Um, so I've been running pipeline for 16 years, and for the most part it's been wonderful. I've, I've genuinely enjoyed and continue to enjoy my time owning this business. But for sure there have been times when it wasn't fun, right? It was just hard. It was a grind, and I felt, um, worn out. And, and burned out, and I'm sure that is, uh, not uncommon for, for business owners in general. So, uh, what, what kind of advice or clarity might you have for, for business owners out there who are just feeling a little burned out and, and are, are looking for some sense of clarity?
Wally Waldron:Yeah, 100%. So first of all, know that you're not alone. Um, and, and again, you know, to, to build credibility, but just tell you how it really is. We here at Ology went through a couple of the, the five Ds this year. It's been tiring. Uh, we've had a couple moments where we had to reach out to our advisors and they had to pull us outta the muck a little bit, right? So, you are not alone, uh, unless you choose to be. Okay. And so, um, find, find some guides along the way. Uh, find advisors, um, and also pace yourself The way that we like to say it, and again, going back to that whole investor mindset is we're looking for people to run the marathon with. when I say that, I'm talking about, I'm looking for people in our company to run the marathon with. We're looking for clients to run the marathon with when we're working for, you know, bringing clients to the exit readiness point. We're looking for relationships in the m and a and investment banking world family offices. Who are ready to run the marathon too, right? Because it, it's a long game and it, and it, and it is very tiring. And so, so pace yourself, um, you know, honor, honor yourself as a human being. And, and, and that would be the first thing. And then know that the business is a vehicle by which the human being could be served.
Aaron Moncur:Great advice. Alright, Wally, thank you so much. What, uh, an interesting conversation that has. This has been, um, how can people get in touch with you?
Wally Waldron:yeah, absolutely. Um, you can actually email us at discover@exitology.com. And if you go to ology.com and click on methodology, you'll see how we are achieving these results in a greater, uh, detail. Uh, there's, there's both a visual aid and a way to, uh, walk through the step by step of how we're doing that. um, of course you can also find our book on Amazon. It's called Ology. And there should be plenty of ways to contact us from those, uh, vectors.
Aaron Moncur:Terrific. Alright, well Wally, thank you again so much for sharing all of this, uh, experience wisdom with us today on the show.
Wally Waldron:Thank you, Aaron. Appreciate it.
