entrepreneur Archives - Your ExitMap

Manufacturer Stuck in the “Neutral Zone”

March 6, 2026 by John F. Dini

Here is how exit planning helped a business owner out of the Neutral Zone.

This manufacturer reached out to an exit planning consultant after receiving a book on planning as a gift from a local professional. He was in no particular hurry to leave his business. In the preceding twenty years of ownership, he had grown it from a local vendor to home builders into a nationally known specialty house.

The company provided him with a good living, generating roughly $700,000 a year in free cash flow for each of the previous five years. He wanted to continue for at least a few more years but also was concerned that he do the right things to maximize his price when the time came to move on.

What’s the Problem?

The consultant pointed out several issues that could dramatically impact his eventual transition.

First, he was handling too many duties that should be delegated. These weren’t things that required his special expertise, but rather areas where he was comfortable in just “taking care of it.” These included troubleshooting IT problems. Although the company had a full-service contract for those services with an outside vendor, he felt it was just “faster” if he first tried to fix the issue himself. Owner centricity is a major value killer in a sale.

On large orders, he prepared the price quotes personally. There were several employees in the sales department who did the majority of quotes, but after one had made an expensive error, the owner took any order over a certain dollar amount as his personal responsibility.

The consultant also pointed out that the business was in the “Neutral Zone” regarding profitability as the principal factor in valuation. With $700,000 in cash flow, it was too big for most entrepreneurial owner-operators to afford.

On the other hand, it was too small to attract a private equity or strategic buyer. Professional acquirers typically pay higher multiples but are seldom interested in acquisitions with less than $1,000,000 in cash flow.

Longer-Term Preparation

The owner retained the consultant as a coach to keep him on track as he addressed the issues. In the next few years, the company made a small acquisition resulting in a second location and greater production capacity. They hired a sales manager who could handle major quotes. At the exit planner’s recommendation, the owner implemented EOS with a different consultant for greater accountability in the management team.

A key employee who, like the owner, had also been a “jack of all trades” enjoyed an incentive program based solely on the company’s gross profit over a fixed level. The consultant pointed out that the improvements driving growth would very quicky make this employee wealthy without any increase in responsibilities. Fortunately, the employee resigned for personal reasons before this became an issue.

For the other employees, they installed new incentive programs based more on increasing profitability. Key employees also received stay bonuses and long-term synthetic equity incentives. This initially caused some concern, (“Are you selling the business?”) but that quickly died down when it became plain that no changes were imminent.

Breaking Out of the Neutral Zone

The next five years brought ups and downs. COVID first reduced sales, then created a surge that couldn’t be duplicated. Eventually the company settled into a sustainable growth pattern, reaching well over $1,000,000 in EBITDA. Of course, there were multiple inquiries about selling during this period. However, the owner felt none of them satisfied his goals for a rewarding life after the business.

His efforts to change the value of his business were driven by the clear personal objectives developed with the planner, rather than just a pursuit of growth for growth’s sake. Eventually he agreed to sell the business to a strategic acquirer for roughly twice the value of an appraisal that was done at the beginning of the process.

None of the changes made were earth-shaking. Having a goal, the means to track it and a framework for moving towards it translated into millions of additional dollars in the owner’s pocket. He was comfortable with a transaction that also preserved his legacy and his employees’ futures.

Is your client ready for a transition? Have them take our 15 minute assessment.

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.

The Exit Planning Fallacy – A Business Owner’s Perspective

September 15, 2025 by John F. Dini

One of the most common sales pitches you might hear from someone claiming to help you “enhance value” goes something like this:

“I’ve reviewed your company and believe it’s worth $4.2 million today. With the right planning, it could be worth $7.7 million. Would you rather exit with $4.2 million or $7.7 million?”

That’s not really a question—it’s a setup. Of course, no business owner would willingly choose the smaller number. But the real issue isn’t which number you prefer. It’s what it actually takes to bridge that gap—and whether you’re being given a full picture.

Are You Falling for the Planning Fallacy?

There’s a psychological term for this overly optimistic way of thinking: the planning fallacy.

A private equity investors group I follow, Chenmark.com, once cited a study published in the Journal of Personality and Social Psychology that perfectly illustrates the concept:

From a psychological perspective, the planning fallacy can perhaps be studied most profitably at the level of daily activities. Consider one familiar example: Academics who carry home a stuffed briefcase full of work on Fridays, fully intending to complete every task, are often aware that they have never gone beyond the first one or two jobs on any previous weekend.

The intriguing aspect of this phenomenon is the ability of people to hold two seemingly contradictory beliefs: Although aware that most of their previous predictions were overly optimistic, they believe that their current forecasts are realistic. It seems that people can know the past and still be doomed to repeat it.

What’s fascinating is that they know this pattern. Yet, every weekend, they’re sure this time will be different. Business owners do something similar: despite knowing how long things usually take (and how unpredictable growth can be), we still believe “this time” will follow our best-case forecast.

You may hear that big valuation potential and think, “Yes, that’s what I’ve always wanted—to grow the company by 83%! I just needed a plan.”

But a plan alone isn’t enough. It’s a start—but not the whole story.

What Really Closes the Gap?

Let’s reframe that optimistic pitch with a more realistic one:

“To grow from $4.2 million to $7.7 million in five years, you’ll need proper planning, dedicated effort, some strategic hires, and reinvesting a significant portion of your profits. That requires growing the business 19% annually—starting immediately. That’s more than double your best year to date. If you spend a year building that foundation first, then you’d need to grow at least 25% annually over the next four years. If you keep growing at your best year’s rate of 7.5%, it will take over 12 years to reach that goal.”

Those are the facts. And the reality is that very few business owners hit those growth rates without serious changes—and trusted advisors to help them.

The Power of Perspective (and the Right Guide)

You may have a solid company. It supports your lifestyle, your employees, and your reputation. Maybe you’ve even dreamed of taking it further. But the risks, the effort, or the lack of a clear roadmap have held you back.

That’s exactly where experienced advisors come in—not to promise easy gains, but to help you map a realistic path to your goals. They help align what you want (your proceeds), with what you’re willing to do (your effort), in the time you have left (your exit timeline).

In our work, we use a Value Gap coaching model that considers four essential pieces:

1. Current business value
2. Your desired outcome—not just “more,” but a specific number
3. The timeframe in which you want to exit
4. The required growth rate to get there

Often, once those last two are on the table, the conversation changes. It’s not just about the money—it’s about what you’re willing and able to do to get there.

The real planning fallacy? Believing it’s just about hitting a number. The truth is, getting the outcome you want depends on understanding the full picture—and working with an advisor who helps you navigate it honestly, strategically, and with clarity.

Decisions Made from Fear

August 25, 2025 by John F. Dini

“I’m taking the logos off my trucks. It just makes them a target for personal injury lawyers.”

“I don’t want to put our newest product innovations on our website. The competitors just copy them.”

“We’re creating a human resources LLC so that employees are separated from the rest of our business. That way we’re safer from spurious claims.”

“We pay all of our employees to bring their vehicles back to the yard every night. We don’t want to be responsible for what they do on their own time.”

“We were thinking of opening a new location, but the news says the economy might dip.”

“I thought about hiring another salesperson, but I can’t be sure they’ll pay for themselves.”

“Our margins are shrinking, but a price hike may cost us customers.”  

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When Fear Dictates Decisions

I can’t. We won’t. I shouldn’t.

Sound familiar? These thoughts creep in as your business grows. You’ve overcome a lot already—taking that first leap, pushing through uncertainty, making tough calls when the stakes were high. But now, you have something to lose. The fear of getting it wrong can paralyze progress.

There’s a well-known quote from Elon Musk. When asked, “What words of encouragement would you give to an entrepreneur?” he answered, “If you need words of encouragement, don’t become an entrepreneur.”

Starting a business meant stepping into the unknown. You did it once—and maybe you’ve forgotten how much courage that took.

There’s a saying worth remembering:

“We know about half of what we need to know. Another 25% is stuff we know we don’t know. The last 25% is stuff we don’t know that we don’t know.”

It’s that last 25% that causes the most anxiety. The unknowns we haven’t even considered yet. They can stop us in our tracks.

So we do what feels safest: nothing. Better to protect what we have than risk the comfort of the present for the uncertainty of the future.

But here’s the truth: staying still isn’t safe. It’s just quietly risky.

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Exit Planning: A Different Kind of Fear

Thinking about life after your business? You’re not alone if that brings up more questions than answers:

• What will I do with myself?
• Who am I without this business?
• Will I still feel needed or fulfilled?

That’s why most business owners don’t have an exit plan. It’s not urgent, it’s not easy—and frankly, it’s intimidating.

But the transition will come. The sooner you face it, the more options you’ll have—and the better prepared you’ll be.

This is where an experienced advisor is invaluable. A good advisor doesn’t just help you plan for exit—they help you clarify your goals, address the unknowns, and convert fear into forward motion.

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Turn Unknowns Into Strategy

Entrepreneurs are natural goal-setters. You’re wired to chase progress. With the right guidance, the fears that hold you back become challenges you can tackle.

Working with an advisor brings structure to uncertainty. It moves you from:

• “I don’t know where to start” to “Here’s the next step.”
• “What if I make the wrong decision?” to “I’m making informed choices.”

You’ve already taken one of the boldest risks in starting your business. Don’t let fear dictate what comes next.

Partner with someone who knows the road ahead—and can help you navigate it.

Missed Opportunities

July 7, 2025 by John F. Dini

Your business is doing pretty well. You’re adding to your personal savings every month and are more focused on tax strategies than making payroll. But how do you know if you’re leaving opportunities on the table?

Some indicators are obvious. Others, less so.

One of the easiest to spot is stagnation. Businesses are like living organisms—they either grow or they shrink. Flat or declining sales are a warning sign. Stagnation limits opportunities for your top employees and makes it easier for competitors to lure away your customers with newer, more innovative solutions.

How does your growth rate compare to your industry or market? If others are growing and you’re not, standing still is really falling behind.

Customer Feedback

What are your customers saying? Your salespeople are often the first to hear feedback from the field. If you’re hearing things like, “Everyone complains about our new auto attendant,” the right response isn’t “Everyone is doing it—they’ll get used to it.” Instead, track call volumes and see if it’s driving customers away.

When was the last time you ran a Net Promoter Score (NPS) survey? The NPS question is simple but telling: “Would you recommend our product or service to another business?” On a ten-point scale, anything below a seven indicates a lack of enthusiasm. Sevens and eights are neutral at best. Only nines and tens are true fans—and every business should aim for a strong percentage of those.

Are you paying attention to buying trends from your top 20% of customers? The Pareto principle holds true in most businesses—that 20% often accounts for the majority of your revenue. Is their total spend declining? Have some of your best customers stopped buying altogether? Has anyone asked why?

Technology: Internal and External

A while back, we wrote about the cost of new technology relative to the value of the people using it. Are you taking advantage of the latest tools? How are you using AI? ChatGPT, Claude, DeepSeek, and Perplexity (along with a growing list of others) can do more than draft emails. They’re a gateway to broader AI solutions. Try asking them about emerging innovations in your industry. How are companies streamlining office work? What AI tools exist for logistics, material handling, workflows, or scheduling?

Are you making the most of trade shows and conferences? Are you there to look for new ideas, or just to catch up with old friends? Are you attending your customers’ industry events—not to sell, but to see what new products and systems they’re adopting? Understanding their innovations helps you stay relevant as a supplier or partner.

What does your innovation pipeline look like? Are you consistently working on improving your products, customer experience, and internal operations?

Human Resources

How challenging is it to hire new talent? Are people leaving for better opportunities? Are you seeing fewer responses to job postings? Are new hire salary demands creating tension with your existing pay structure? Finding good people is hard—but it’s even harder if you aren’t competitive in the talent marketplace.

You may not have immediate answers to all these questions—but asking them is the first step. They’ll help you identify gaps, spark new ideas, and strengthen your business for the future.

Remember, you don’t have to solve all of this alone. The right advisor helps you ask the right questions, find the right answers, and act on them. Fresh perspective and outside expertise often reveal opportunities you didn’t know you were missing.

Deal Momentum, Deal Fatigue, and Pre-Sale Diligence

May 12, 2025 by Pat Ennis

With the help of her Exit Planning Advisor, Betty has decided that selling to a third-party buyer would best accomplish all of her goals (financial, values-based, legacy).

Quantifying her business and personal resources with a financial gap analysis has been helpful to Betty in determining her departure date in six years. She now knows the current fair market value of her business and how much it will need to increase in value to attain her financial objectives at sale in six years.

Betty now also understands (again with the help of her Exit Planning Advisor) the importance of maintaining “deal momentum” when she eventually enters into a sale transaction.

Betty now knows that all too often, “deal fatigue” sets in and damages or destroys deal momentum experienced early in the process. She also understands that deal fatigue typically results from a difficult and lengthy due diligence process. Due diligence is defined as the process by which the buyer requests documents, data, and other information about the business they want to review to identify any potential liabilities or hindrances to a deal getting done. The process of due diligence involves setting up a digital “Data Room” where all requested information is deposited for review.

A key component of Betty’s comprehensive exit plan is to do everything possible to ensure deal momentum and avoid deal fatigue when the time comes.

Betty also wants to be prepared if a serious and qualified buyer comes calling earlier than her six-year time frame. So, with the assistance of her Exit Planning Advisor, she is going to conduct “Pre-Sale Diligence” systematically over the next 12 months, including setting up a virtual data room that she will regularly review and update as needed. This preemptive approach will significantly increase her chances of deal momentum and a smooth transaction experience.

At that point in the future, when Betty is approached by a potential buyer or when she takes her business to market, having conducted Pre-Sale Diligence, she will be better prepared, more confident, and less stressed and anxious—all of which lend toward sustaining deal momentum and a successful transaction.

Pat Ennis is the President of ENNIS Legacy Partners. The mission of ELP is to help business owners build value and exit on their own terms and conditions.