Positioning Your Business in an Unpredictable Economy – Episode Transcript
Rem Oculee (00:05):
Welcome to the Exit Mindset Podcast. I’m Rem Oculee. 15 years ago, when I was trying to sell one of my companies, I couldn’t get what I thought was the right price for it. I realized I had things set up the wrong way, even though the company was profitable. So, I spent years researching and studying exit strategies to improve my company’s valuation. I discovered that the same process that improves valuation would improve business profitability and give me more free time. I’m here to show you what I have learned. You see, the best way to grow your business is to look at it from the perspective of someone who’s going to buy your company. Once you start thinking that way, magic happens, and you start seeing things you could not see before. But that’s not all, I also discovered the three principles that you must know to command a better price for your company. The three principles are first, the product, second, the infrastructure, and third, the conversation you have with the consumer. Once you master these three principles, you will be on your way to increasing your profits, your company valuation, and get more work-life balance. So, listen in and learn how you can do that. I will teach you through this podcast, lessons from the trenches, and we will have a dialogue with some of the greatest minds on the planet.
Rem Oculee (01:29):
In every episode, we talk about business strategies. And what I want to do is give you a little bit more well-rounded approach to the entire business spectrum. So, you won’t be boxed into one thing or the other. So, I want to remind you that the Exit Mindset predicates on you thinking like somebody about to sell their company. How would your company look like if a buyer is right there in front of you and they’re offering you a price for it? Would that be the fair price that you think you ought to be getting? And by utilizing the product, the infrastructure, and the conversation, you would be able to expand on what you have and make sure that your company’s operating at an optimal level, in order to capture the highest valuation for your company and the highest price you want from the buyer. Having said that, do you ask yourself sometimes…
Rem Oculee (02:14):
What about the economy? What about the way my government spends money? Wherever you are on the world right now, probably a government is spending some amount of money that is incurring some debt. Many listeners are probably wondering, is this going to affect their businesses? Or how does it affect their businesses? So, I’m going to give you an example about what we have here in the U.S. as to how things are moving and where we think is going. And I’m going to give you an idea of how you should look at your company, and how you should look at your exit and your mindset in building your company. So, in the U.S. we have currently over $20 Trillion in deficit. Now in your country, it could be something else, could be different and that’s something for you to know. So, I’m going to give you something that might not appear to be very obvious.
Rem Oculee (02:58):
You might know it deep inside, but ultimately you have to think about it a little bit. Where do governments get their money from? It’s one source usually, it’s called taxation. So, the governments usually tax us, all of us, businesses, individuals. Take that money and use it to spend. And if you understand and keep that fundamental fact in mind, you’d understand that the amount of money a government can have wherever it is. Whether it’s the us government or any other government, it is proportionate to the amount of business that companies do. Now, let’s go to the second part of the equation. Companies like you have to sell in order to produce income and revenues, which you would pay the government taxations on. So, now the more that government taxes people, the less disposable money those people would have. Now, let’s take it a little bit further. So, if somebody, an individual that was earning a certain amount of income and paying a certain amount of taxes, and now you take more taxes from them.
Rem Oculee (04:00):
When that happens, that individual must choose which goods and services they’re going to buy. Let’s say your goods and services are one of them. He might choose that because I’m being taxed more to pay for all the things that the government want to do, then I’m going to have to not buy the item that your business is producing. Why? Because it’s disposable, I don’t have to do it. I used to like it, I used to buy it before they tax me so much. But now that taxation is so high, I am not going to do it. What is that going to do to you and your company? You are going to be selling one less person. What if we multiply that by say, for example, a hundred thousand people or a million individuals or households. Now you sell it to less people. Sure, you might be selling, but you wouldn’t be selling as much because the disposable income is less.
Rem Oculee (04:47):
What happens when you sell less? Less revenues. What happens when you have less revenues? You pay, you pay less taxes because you’re not selling as much. Now that you’re making less revenues, you’re paying less taxes, the government wants to get more money because not getting enough from you. So, it’s going to do one more thing. What’s that? Raise your taxes. Great. So, now they’re killing the goose that lays the golden egg. Where could this lead? At some point, the government can only take so much from you. And there’s only so much taxation that they could get from people in order to pay for things they get. So, you as a business would end up in a bad spot and you might end up having either to close or scale down your employees. Meaning they won’t have as many employees or pay them less, or whatever you have to do.
Rem Oculee (05:30):
And ultimately that cycle, I’m just applying it to you. But you can imagine all those businesses that are doing that. They’re all having the same effect that you’re having. Who is winning? I propose to you, nobody’s winning. Now, at the end of the day, the purpose behind that thesis that are in front of you in here, is that you need to understand how to position your business in a way that if these things are to happen, that you are ready to move forward and to be able to thrive at least. Or at least make it through those times until some of those governments either start acting better. Start understanding economics and what is the meaning behind what companies do, and what they should do to help companies like yourself in order to thrive. So, they could thrive themselves because the problem with just raising taxes on people, what happens is that it hurts everybody, including them.
Rem Oculee (06:18):
They could probably end up getting more taxes from you if you’re selling more and they’re making more. So, think about it. But they don’t think that way. You have to understand governments and the public sector doesn’t understand what you do as somebody who is running a company, and they don’t understand your problems. As far as governments are concerned, you owe them the money. And that’s universal because most of the people that run the government, I’m sure they’re nice people, but at the end of the day, they’re not in business like you. They’ve never, they haven’t done it. And if they have it probably didn’t work out, you know, or did they get the exact experience needed to understand the problems you face. So, what you want to do is make sure you adopt the three principles of great product, exit product, great infrastructure, and exit infrastructure, and a great conversation.
Rem Oculee (07:02):
And that is exit conversation. And in many of those podcasts, we talked about some of these issues and we’re going to continue to highlight them. But what I want from you is to start thinking in terms of mainly your product. So, you have to have a product that appeals to a segment and turn that product to an exit product that people need. So, an exit product is a product that people want and desire, and that the buyer of your company would go, “Even though there is difficult to economic situations, I think people do want that product. Or I see a market that is willing to sort of tolerate the economic difficulties they’re having and still buy that product because it represents a value to them.” And you are in the business of value, your product is all about value. It’s all about value. If you don’t create that value for people, they’re not going to be willing to dip into their pockets.
Rem Oculee (07:48):
And sometimes they’re not too deep, to buy what you’re offering. So, let’s figure out what the solutions are. Well, your first path is to go to some of those episodes we talked about in the past. We talked about the product, infrastructure, and the conversation. And in those episodes, we outlined some of the things you can do to have about a model, an exit-able model. And remember the purpose of the Exit Mindset is not for you to sell your company. The main objective of the Exit Mindset, it’s for you to build a better company. And good companies, believe it or not, withstand tough economic times. And I’m going to give you an analogy on that one. It’s sort of like a ship in the ocean. The weaker your ship, if there is a little storm, you’re going to capsize, you’re going to sink. And that’s example of companies that are not well built.
Rem Oculee (08:34):
And as soon as economic turbulence occur, they sink or they capsize. Or they have problems, and all sorts of things. Now, good companies that are built on solid principles that I talked to you about, are going to survive. Now, it doesn’t mean that you’re not going to get hit. They gonna have a hole in the deck, something’s going to go wrong. They gonna have a tough time, they’re going to navigate, but they ultimately get out of the storm. Why? Because of the solid planning that they did, and because of the solid infrastructure, and solid product, and solid conversation. It can weather these things. And if you want to know the test of a good business versus a bad business, I’ll tell you right now, watch them during bad economy. I am not saying to you that there’s some companies that economies turns on them, and it’s in an unfortunate way that wrecks their business model.
Rem Oculee (09:23):
But given that you can navigate the business out of it, a bad economy and a bad storm. If it’s doable, the ones that are strong in debt from an exit perspective are the ones usually that survive. And the ones that are just sort of built haphazardly, they’re not thinking about it. They’re just a product, it’s not that great, their infrastructure isn’t that great, the conversation isn’t that great. And they really aren’t prepared, and they’re not thinking about, they’re the ones who usually go away and have problems. So, what is my purpose of this for you? My purpose of this for you is to create awareness, to be aware of the environment. Other ways I can describe it to you is having what I call situational awareness. Where are you? What does it look like? What’s your surrounding? What is your economic landscape? What is the landscape when it comes to your finances?
Rem Oculee (10:09):
What is the landscape as far as your government finances? Because you gotta look at that and figure out where are they going. Now, sometimes you don’t have access to all the data, all the information, everything that needs to be, that you need. But you can make approximations. What does it look like? And believe it or not, a lot of these things, if you cannot look at it from a height of a perspective, you’re able to kind of figure out where things are going. Not in a precise way, but in a very general way. But it’ll enable you to withstand some of those storms. There’s another strategy, or if you call it a tactic, however you want it, that can offer you in here. Which is to create simulations, and I go through what these are. Simulation is projecting and that scenario in the current state, before it occurs, that’s all it is.
Rem Oculee (10:53):
So, you simulate a bad economy, and you start looking into all aspects of what you have, and the stimulation doesn’t have to be complicated. I try to offer you easy solutions. I try and offer you solutions that you can do sitting on your couch, walking in your yard, being anywhere. And try and sit down and figure out if a bad economy is to hit, how is my product going to do? Who’s going to buy it? Is it really going to withstand that? You have to think of some things that if, if the bad economy is to occur and I get high taxation, I get high price. I’m still able to sell and stay afloat. Think of these things. Same thing with the infrastructure, same thing with your conversation, and try to see where you could go. That process, I can tell you, I’ve seen it save many, many companies. Because when they think that way and they take all possibilities…
Rem Oculee (11:41):
They’re ready. If it happens, they’re ready. And remember, you cannot practice to fight just before the fight. You gotta practice at a time. Great fighters, practice fighting for years ahead of time. And then when they get to the ring, they’re ready to go. Or if they face and certain situation, they’re ready to go. Are you ready in your company to face a problem? If you’re not, you need to reconsider your approach, run stimulation, and take the Exit Mindset and superimpose it on that stimulation. And I can assure you, you gonna be in much better place had you not thought of it that way. And by the way, if you have any questions, email me at firstname.lastname@example.org. That’s email@example.com. I’m Rem Oculee. Remember, action is everything. Use it or lose it. I’ll see you on the next episode.
Amber Giannone (12:41):
You’ve just listened to the Exit Mindset Podcast with Rem Oculee. If you haven’t yet subscribed or followed, please do so in your podcast listening app. Or better yet, visit exitmindset.com to join the conversation, access the show notes and discover our bonus content. Lastly, we want to help as many business owners as possible. If you know anyone who could benefit from the information given in this podcast, please feel free to share it with them. Until next time…
Email your questions to firstname.lastname@example.org